When thinking of the Russian automobile industry, one first thinks of old Ladas; however, things have significantly changed recently.
Many producers have built factories so they could perform better in one of Europe’s largest automobile markets. True, most of the factories are assembly lines, but more and more of them are “real factories” with a significant amount of domestic parts in the production process.
Both sides benefit: by localizing the production, the car companies ensure a lower price for consumers, don’t have to pay tariffs, while Russians find work in the newly opened factories.
Information from 2015 shows that the 14 highest selling models in Russia were domestically produced. Those aren’t just Lada, but rather Hyundai, Kia, Skoda, VW, BMW, Renault, Ford, Mazda, Toyota, and Mercedes… and not just passenger cars but also delivery vehicles and trucks.
In the golden age before sanctions, around 2.4 million new cars were sold in Russia each year, but that number has decreased to 1.3 million last year. After the Russian president Vladimir Putim announced that “the country has exited the crisis,” the number of cars sold and produced domestically has increased in the previous several months.
Analysts consider that the Russian market could grow to up to 2.5 million new cars per year by 2025.
Of course, the lion’s share of sold cars will come from domestic production lines, so the question of the use of factories arises. Russia is currently attractive to large producers because the Russian government subsidizes the automobile industry, which has proven key to its survival in the times of sanctions.
Russians are looking towards the future, so the Ministry of Economic Developed published a Strategy for the Development of the Automobile Industry until 2025.
On 125 pages, the Strategy outlines the basic goals of reducing government subsidies, rationalizing production by decreasing the number of automobile platforms, increasing the degree of localization of the production process, stimulating the growth of production and export…
Nonetheless, the importance they give to the BiH market could be a good signal to our producers of automobile parts for cooperation with car factories on the east of our continent.