Russia’s indigenous supplier industry is in need of higher investment and an upgrade to reach Western standards and meet the needs of the global OEMs who are investing in Russia, according to GM purchasing chief Bo Andersson.
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Speaking to just-auto on the sidelines of an industry conference in Frankfurt, Andersson said that the supplier industry in Russia is huge but that many of its firms are twenty years behind today’s standard.
“The challenge we have in Russia is to build vehicles to today’s standard for Western Europe. We need to improve existing suppliers in Russia and we need to bring in global players.
“For us in Russia today, we are supplying 50% from local Russian suppliers and 50% from global suppliers. But we think we can upgrade the local supply base over the next five years.”
Russia’s supplier industry is seen by analysts as suffering from the legacy of Soviet era times when manufacturers such as AvtoVAZ were very highly vertically integrated.
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By GlobalDataThere are also structural problems further down the supply chain related to factors such as a lack of investment and low volumes which create supply bottlenecks and quality shortfalls.
Investment in Russia by global Tier 1s remains patchy according to analysts, with some vehicle manufacturers potentially being left with high logistics costs on imported components.
Dave Leggett
