New State Corporation to Oversee Russian Auto Industry

The Russian government is considering establishing a state corporation tasked with developing the domestic auto industry and combining the existing industry’s competencies.

The corporation, to be named Rosavto, will become the main “negotiator” with global automakers, primarily those interested in establishing production facilities within Russia.

According to the Vedomosti business paper, Rosavto will not act as a manufacturing enterprise, but as a curator of all stages of car production in Russia.

RoAD President Alexey Podshchekoldin says the corporation will become part of the existing state strategy for the development of the automotive industry, which is designed to be in place until 2035. Its actual establishment will be completed in the first or second quarter of 2024 and some leading Russian business associations will participate. 

According to Podshchekoldin, Rosavto will focus on plans to produce both cars and spare parts in Russia; the development of new models and technologies; distribution of orders; legislative initiatives for the auto sector; and issues of personnel training.

Regarding global automakers, Podshchekoldin says to decide on organizing production in Russia, foreign investors need a “negotiator from the state” along with guarantees that their products will be in demand in the local market. He is confident that a specialized state corporation could take over these functions.

Podshchekoldin adds, “At first there was an idea to create a copy of the USSR Ministry of Automotive Industry, but, firstly, it is more complicated, and secondly, our largest state corporations already have the powers of ministries.”

A separate Ministry of Automotive Industry existed in the USSR in 1946–1947, 1955–1957 and 1965–1988. Now the key aspects of the sector’s development are regulated by a strategy developed by the Ministry of Industry and Trade. The government approved the strategy in its current form at the end of 2022.

The newly established corporation is expected to focus on implementing the industry’s most important goals, such as an 80% minimum level of localization of parts and technological sovereignty. It also will focus on stimulating production and demand and establishment of auto component production. In the latter case, particular attention will be paid to propulsion systems along with rollover protection and passive restraint systems.

The plan will carry the need for huge investments with it. According to preliminary estimates, establishing the Russian auto parts sector and making it competitive in the international arena will call for investing RR 2.7 trillion rubles ($29.6 billion) until 2025. R&D will account for a significant part of this sum.

Veteran industry analyst Vladimir Bespalov says establishing the state corporation will be associated with some serious problems that will need to be addressed.

Bespalov says concepts for developing the domestic automobile industry are different from those of 10–20 years ago, when automobile production was not considered a strategic industry by the state. He also believes consolidation of the industry is needed due to the scale of the tasks it faces.

“Another question is in what form this consolidation should take place,” Bespalov adds. “Manufacturers themselves often cannot agree, and coordination on the part of the state is needed.”

According to Wards Intelligence data, light-vehicle sales in Russia totaled 936,005 in 2023, up 36.2% from 2022 but down 44% from 2021. The top-selling brand was domestic producer AvtoVAZ, with roughly 40% of the market, followed by Chinese brands Chery, Great Wall and Geely.