February 4, 2010
The discussion during this panel focused on the problems and outlook of the Russian automotive sector. The speakers discussed the potential for future developments and opportunities in the sector that can be had by cooperating with global producers. They noted that the economic crisis has created opportunities for innovation and new business models, and they agreed that Russia’s car market will inevitability recover, noting that very few foreign automakers have canceled plans to build production facilities in Russia as a result of the crisis. The speakers also touched upon problems related to quality OEM suppliers, concluding that most domestic producers are as yet unable to deliver quality OEMs, which makes it difficult to move the sector as a whole to a new qualitative level.
Christian Esteve spoke of the belief that the alliance between AvtoVAZ, Renault and Nissan remains very promising. He believes that AvtoVAZ will help the trio strengthen their positions on the Russian market with aggressive plans to continue cooperation (the companies have invested some $2 bln in the alliance, which confirms the seriousness of their intentions). He also mentioned the important role of OEM suppliers. Renault will be focusing its efforts on improving its relationship with OEM suppliers, not only because it is a necessary step in taking the quality of Russian vehicles to the next level, but also because it is a vital factor in cutting costs.
Igor Komarov noted that AvtoVAZ’ future development will hinge upon the successful implementation of innovation, know-how, management efficiency and an adequate level of investment. In November, AvtoVAZ signed a EUR300 mln contract with Renault related to its new B0 platform. A new Lada vehicle is expected to be introduced in 1H12, followed by other new vehicles under alliance brands that will be launched from AvtoVAZ production lines in Russia. Also notable is that the company is targeting personnel reductions to the tune of 30,000 employees to take the total count to 70,000. That said, many of the employees that are cut will continue to work in newly established subsidiaries.
Sergey Kogogin agreed that cooperation with OEM suppliers is one of the most critical tasks in efforts to improve quality. But he cautioned that not that many suppliers are ready to cooperate with global OEM producers to improve quality and implement innovations today. This forces KamAZ to search for suppliers abroad, an effort that has been successful to date as many foreign suppliers are ready to provide spare parts at attractive prices and of a higher product quality than Russian analogues. Mr Kogogin said that over the next four to five years, KamAZ forecasts revenue generation to the tune of $4-5 bln.
Andrey Dementiev began by noting that the decline in Russian car sales was one of the deepest in the world, yet thanks to government support the outcome turned out less dramatic for automakers, as the state provided massive support well in advance. In 2009, federal and municipal spending came in above R45 bln, allowing them to purchase more than 30,000 vehicles with an additional 70,000 passenger cars sold under auto-loan subsidies. In 2010, the government will continue to support the industry with similar measures. A Russian version of the “cash-for-clunkers” program will also be started, allowing for additional sales of up to 200,000 passenger cars. He also mentioned that the Russian car market remains the fifth largest in Europe and still exhibits attractive growth characteristics.
Andreas Renschler noted that Russia is a country with enormous land reserves, where transportation infrastructure plays a very vital role, implying that demand for trucks should inevitably recover. Daimler is happy to cooperate with KamAZ, he said, adding that the two companies work together quite closely. Daimler provides technological know-how from its extensive experience on global markets, while KamAZ ensures better access to the Russian market thanks to its large domestic presence.