RUSSIA: Rouble pressure "huge advantage": Bo Andersson
"81% of our cost structure is in roubles, so it is a huge advantage for us" - AvtoVAZ CEO Bo Andersson
AvtoVAZ says the current weak status of the Russian Rouble is a "huge advantage" as it looks to make hay while the currency sun shines.
The rouble has come under intense pressure for the past year as politics in the guise of what some would see as Moscow adventurism abroad - a position robustly denied by the Kremlin - has impacted the currency through foreign sanctions and cripplingly high interest rates - although the pressure on these is receding somewhat.
But the currency depreciation cloud very much contains a silver lining for component producers localising in Russia with AvtoVAZ keen to capitalise on the opportunity.
"If we take our Lada product, today we have 81% of our cost structure in roubles, so it is a huge advantage for us," AvtoVAZ CEO Bo Andersson told just-auto on the sidelines of this year's St Petersburg International Economic Forum (SPIEF).
"There is always a benefit. I think the rouble will get weaker and will help us [but] we can't count on it."
The AvtoVAZ chief also urged the Russian government to maintain its Decree 166 programme mandating local content for automobiles, while he also backed the continuation of Moscow's scrappage scheme, which has boosted the market somewhat, although year-to-date sales have come under severe pressure.
"The good thing, for me, Russia is extremely difficult, but it is difficult for everyone," added Andersson. "That is why I say I love to work here, it is challenging, but if you have the right focus, the right people, you will be successful.
[But] "We are still a long way from where we should be."
Andersson also stressed the importance of adopting Euro V standards in Russia and insisted he backed the benchmark. "For the last year I have been voting for Euro V," he said.
"Most of my industry colleagues voted against. Most of the world has Euro VI. Yes, it may be more costly and difficult, but let's move as quickly as possible to get to global standards."