Renault Russia says it has won the battle to win the confidence of a major North African market as the export arena becomes increasingly important.
The French manufacturer’s Russian division, based in Moscow, now produces EUR75m of components for overseas shipment and has secured a major slice of supply to Renault’s Algerian operation.
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“[The] EUR75m is the [total Russian] localised component [value],” Renault Russia director of business development and export, Maria Pereiaslavtseava told just-auto on the sidelines of this week’s [14 March] Russian Automotive Forum organised by Adam Smith Conferences in Moscow.
“Algeria is our flagship in terms of export. There is a joint venture in Algeria between Renault and the local government. We spent a lot of time convincing our colleagues the bodies produced in Russia would just as good as as others produced in Europe.
“These are specific products – they are not products which can be used for the local [Russian] market. We supplied 1,000 bodies – they are welded and painted. Our competitive advantages compared to other Renault parts are these bodies are 90% localised in Russia – they are made with Russian steel. That is very important, doing that we get a competitive price.
“I want to thank the Russian Export Centre when they introduced their measures to compensate for transportation costs including marine shipping. We could offer a pretty good price to Algeria. We are proud we had to double our production because the Algerian plant required twice as many bodies. Starting from September, we were able to ship more than 20,000 there.
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By GlobalData“In addition to bodies we will be shipping out other components produced in Russia.”
Renault Russia also exports to the United Arab Emirates, although concedes the certification process is a tough evaluation, requiring “many months” of discussions.
Part of the challenge also lies in Russia’s geography – it can take eight to ten weeks for example to ship parts to Latin America but the Renault export director also highlighted the importance of seeing domestic component manufacture operating in tandem with world operations – a recurring theme running through the Moscow conference.
“We integrate Russian producers into the global value chain and they can get orders from major companies,” added Pereiaslavtseava “We are fine with metal and plastic parts – we have more than 190 items we were able to supply last year and turnover in export components is EUR75m.
“It is mainly Turkey and Romania which accounts for more than 60%, but also Latin America, Europe, the Middle East, India and North Africa. Iran is an interesting market but since September they introduced a scrappage fee – it is really huge. They also have high customs duties – [which] can be up to 100% and higher.
“That is why we have been talking about joint ventures and production hubs.”
Russia is part of the Eurasian Economic Union, also comprising Armenia, Belarus, Kazakhstan and the Kyrgyz Republic and the Renault export director confirmed Vietnam had recently inked an agreement with the block which could potentially lead to a decrease in customs duties.
“We were one of the first to say we have to export from Russia,” noted Pereiaslavtseava. “People said we would never succeed [but] bit by bit they understand the products were added value. Now it has succeeded very well.
“We say ‘Made in Russia’ – it gives us pleasure. We show our quality is growing.”
