"Russia will become the largest car market in Europe in the next two years”, said Carlos Gohsn (2008), CEO of Renault of France and Nissan of Japan.
For both its macroeconomic and social policy reasons, Russia is growing. In 2007, all sectors of the Russian economy had seen steady and constant growth. The machinery industry's sales are driven by strong domestic consumption.
The automotive market is constantly evolving too. It is an attractive market for foreign manufacturers to export to the Russian territory, and it is also evident that the largest country has started to attain interest of other countries concerning production. The gradual trend towards higher potential consumer vehicles positioned at more ‘upscale' ranges also shows the appearance of a strong consumer class.
We must understand that Russia has attained success with some internal political changes by focusing on stability, which had the effect of greatly reducing the level of the country's risk abroad. In addition, some manufacturers do not hesitate to compare Russia to a tax ‘haven' in the sense that labor taxes are very advantageous.
In addition, the recent right to buy on credit and falling tariffs on imported vehicles have allowed foreign manufacturers to compete with Russian brands. Finally, the new import tax on vehicles supports the new automobile market, particularly for foreign manufacturers, at the expense of that opportunity.
This report will therefore take over the current market situation, analyze it, understand the internal and external conditions, and provide the openings and a five-year forecast of the future.
This study focuses on the automotive sector in Russia. It includes any type of vehicle for four people, wheels sold to individuals and the segment of light commercial vehicles.Thus, trucks, buses and motorcycles have not been considered in this report. The standpoint of foreign cars and domestic brands will be developed.
Between 2005 and 2006, according to Ruth Stanley (partner of PricewaterhouseCoopers), car sales rose by 20% to 2.06 million units (the increase in value was by 45% to reach $32 billion ). This increase was driven by increased sales of foreign vehicles, while sales of Russian cars underwent a downturn. 800,000 Russian cars were sold in 2006 whish represented an upturn of 5% from the previous year.
In 2007, sales of new cars totaled 2,644,300 units, up by 13.7% over 2006. Of these 2,644 million units, 715,000 came from local manufacturers (a decrease of 8.5% over 2006), about 440,000 were from western manufacturers assembled in Russia (+63.6%) and 1.49 million were imported cars (+16.8%).
The market growth between 2005 and 2006 had been 20%, but from 2006 to 2007, it had only been 13.7%. Several analysts and industry experts had also predicted this decline (Valeri Tarakanov, Yevgeny Chago). They said that it had been due to the fact that the transfer of savings of the population in the real estate of the automobile market had not been as strong as the year 2005. Moreover, the supply of foreign vehicles to the market in terms of services and logistics had been less than the demand.
Tags: Russian automotive market, Segmentation and market shares, Key Success Factors
[...] In contrast, we find Russia as a market attractive to Chinese vehicles that do not penetrate the European market for reasons of environmental protection. Between these two situations, we see that the former is an extreme, while the second is the market reality. Thus, cars with absolutely new technologies do not substitute for Russian and foreign cars. The Moscow Metro is expanding a network of 270 kilometers. St Petersburg also has its own subway. The Moscow Metro is one of the most used metro in the world, with 7.13 million passengers using it daily. [...]
[...] Gaz is one of the few manufacturers of the former Soviet Union to have survived in the market of cars and in the importation of Western and Japanese used cars and the citing of foreign companies in the Russian territory. It entered into a partnership with the company Ish to finally confirm its position but was only weakened. The company was able to continue with unbeatable prices for categories of vehicles where it has been present, and a robustness known to Russian buyers. [...]
[...] The rise of foreign automakers operating in Russia Source: ASM-Holding The threat of new entrants is very high, since the sector is entirely open and booming Intensity of direct competition Here is a list of thirty companies involved in the market of assembling cars in Russia and therefore form the Russian automotive market: AMO-ZIL (Russian) in Moscow; Avtotor (Russian) in Kaliningrad; AvtoVAZ (Russian) in Togliatti, Samara region; Ford Motor in Vsevolozhsk, St Petersburg region; GAZ (Russian) in Nizhny Novgorod; GM-AvtoVAZ in Togliatti, Samara region, GM-Shushari in the St Petersburg region; Great Wall Motor (Chinese) in the economic zone of Alabuga (Tatarstan); KAMAZ (Russian) in Naberezhnyie Chelni (Tatarstan) in St Petersburg; Nissan, Peugeot-Citroen, Renault Avtoframos in Moscow; SeAZ-AVTOCOM (Russian) in Serpukhov, Moscow region; Severstalavto (Russian) in Cherepovetz, Vologda region; UAZ (Russian) in Ulyanovsk, ZMZ (Russian) in Zavolzhie, Nizhny Novgorod region; ZMA (Russian) in Naberezhnye Chelni (Tatarstan), SOK (Russian) in Samara; IzhAvto (Russian) in Izhevsk (Udmurtia); Roslada (Russian) in Syzran, Samara region; Suzuki-Shushari in the St Petersburg region; TagAZ (Russian) in Taganrog, Rostov region; Toyota-Shushari in the St Petersburg region; Volkswagen–Grabtzevo and Volvo in the Kaluga region. [...]
[...] It is surprising to observe that since the arrival of Putin to power, and despite all the governmental abuses, Russia has increased its GDP by to bring justice to the level of GDP in 1989 (the year of the fall of the Berlin Wall). Inflation was in 2006 and 10% in 2007. This rise in inflation was due to strong foreign exchange inflows, while the Russian central bank had decided to maintain its interventionist policy in order to avoid an overly rapid appreciation of the ruble. [...]
[...] In recent years, vehicles have become the flagship products of the manufacturer. In light commercial vehicles and mid-range vehicles, Gaz produces according to international standards. By partnering with foreign manufacturers, particularly Chrysler , it tries to maintain this market segment and has become highly competitive with the arrival of major automotive groups in Russia and the import of used cars from Western Europe and Japan. Its production of trucks and buses has a good reputation, especially in terms of robustness and reliability, which is not the case for its cars. [...]
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