Russia’s burgeoning passenger and LCV market may open up potential for new domestic component manufacturers to supply OEMs and also export says the Association of European Businesses (AEB).
After four years of almost unremitting gloom, the AEB has posted 12 months of sharply increasing sales as a combination of Russian government stimulus measures, falling inflation and huge pent up demand fuels a return to some big ticket purchases by consumers.
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“The market is recovering, but maybe export is also being developed,” AEB Automotive Components Committee chairman, Andrey Kossov told just-auto on the sidelines of this week’s (14 March) Russian Automotive Forum organised by Adam Smith Conferences in Moscow.
“A big challenge is what the government can do to support cooperation of industries, for example steel and metal industries. They have established products with good localisation and export. How the government makes sure the metal industry cooperates with the automotive industry – that is what we [AEB] are trying to do.
“It is very, very good to see recovery has been sustainable for the last 12 months. Whether it is sustainable longer term, it looks like it should continue. Let’s be positive, let’s assume this growth will continue.
“There are many investors who have already invested into Russia, they have capacity and they need to utilise this; it is not time to close factories, you have to fill the factories.”
Moscow has taken a keen interest in the automotive sector and part of AEB’s role is act as a facilitator between its members and the government, which has ploughed a significant amount of money into the industry as it looks to maintain manufacturing capability despite the omnipresent spectre of economic sanctions which continues to hang over Russia.
“We as an association, [our] purpose is to get common issues of the business and talk to the government, talk to the market, talk to outside, everything to get business together and coordinate in line with anti-monopoly legislation,” added Kossov. “I think it works well.
“It could be some legislation coming – [for example] industrial assembly or [Decree] 166 or common legislation which can be implemented in Russia which could affect business in Russia. For example, recycling waste which impacts different types of business [or] technology regulation for emissions control.”
See also: Russian car market up 25% in February
