The Moscow Times reports that auto components makers have begun to follow the OEMs – such as Ford and GM – into forming operations in Russia.
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Henrik Nanzen, president of Ford’s Russia operations, was quoted in the Moscow Times as saying at an industry seminar this week that Russia is the “last big opportunity in the developed world” for parts makers.
But there is a long way to go.
“You can count the Western parts suppliers on the fingers of one hand,” said Alexander Ostrov, Russia director for Michigan-based Delphi Automotive Systems, which has a joint venture with the Samara Cable Plant to produce wires for AvtoVAZ cars.
Component makers are hoping for growth as foreign auto companies enter the market. Ford and GM – the two largest foreign investors in the auto industry – are both expected to begin production in Russia later this year.
Western carmakers need parts makers to establish themselves locally in order to get a vital import tariff break on supplies.
Russia’s foreign investment law states that if foreign carmakers increase the share of locally produced components to 50 percent in five years, they can import the rest of their parts duty free.
