Michelin says it exports around 30% of its production from Russia, as the tyre supplier also looks to build on its domestic presence in the country, including many premium brands.
Russia – in common with many markets – imposes localisation constraints on overseas manufacturers in a bid to boost home employment and ensure technological expertise remains in the country.
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This has become particularly important in the last few years as the ratchet of international economic sanctions from the West has seen import substitution take centre stage for Russian manufacturing. Of equal importance has been the fall in value of the rouble, making exports far more attractive.
“We have a factory near Moscow and are producing up to 2m tyres there,” Michelin Russia & CIS CEO and president, Kamran-Charles Vossoughi told just-auto on the sidelines of last week’s International Economic Forum (SPIEF) in St Petersburg. “This factory is specialised in the Nordic segment.
“Let’s say we export to countries in Eastern Europe [as well as] ‘Stan’ countries [and] Belarus and Ukraine. [Also] for Nordic countries like Finland and Sweden [30% total export].”
Michelin sells around 90% of its global product in Russia in the passenger car, bus and light truck segments and will launch a studded tyre range this winter.
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By GlobalData“All countries are trying to impose [localised] constraints and Russia is very developed for that,” added Vossoughi. “As we are producing locally here [some] raw materials we buy here.
“We have more than 25 different materials going into a simple tyre, so some of them are produced in Europe and some in place. The Russian market especially, a lot of that is premium.
“We have all big car manufacturers here: Toyota, Renault, PSA, Kia, BMW and we are producing these kind of tyres [premium] for original equipment [manufacturers]. This market is becoming richer and richer.”
Michelin has around 1,100 employees in Russia and apart from a few overseas managers, most of the senior team is Russian or Ukrainian.
“Russia is a developed country in terms of digitalisation,” noted Vossoughi. “For example more than half of tyres bought in Moscow are online. We need to adapt and adopt digital services.
“The Russian consumer is very demanding – they ask more technical questions about tyres [than] consumers in the West.”
Part of that consumer demand is driven by Russia’s extremely challenging climate, particularly in winter, when temperatures even in large cities such as St Petersburg can plunge to -25C. A defining sound of Russia – quite often late into spring – is the distinctive noise of studded tyres adapted to cope with this unique climatic region.
Michelin has been in Russia since 1907, apart from the Second World War and Soviet period.
