Russia is unlikely to witness its previous exponential growth rate of 20% in the short-term, but it will nonetheless post substantially improved performance compared to Europe, says one automotive consultant.
Berlin-based Consulting4Drive made the comments as it addressed delegates at last week’s Automotive Supply Chain Magazine Congress at the UK home of Formula 1 in Silverstone, where it outlined opportunities in Russia.
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“[Growth of] 20% is never going to come back,” said Consulting4Drive head of Russia, CIS & Eastern Europe, Maria Vola, at the Congress. “But it is growing further and faster than the rest of Europe.
“The market has a lot of potential to grow – it has gone a long way with the incentives of the Russian government with the decrees of 166 and 566 requiring foreign OEMs to localise.
“Due to that, there has been an enormous push in the last few years in terms of the automotive industry.”
The Russia specialist added Tier 1, Tier 2 and Tier 3 component suppliers were localising rapidly in the country, noting companies such as Visteon and Valeo were providing “upper scale” parts to Renault, Ford and other OEMs.
The issue of corruption in Russia is also being tackled, but remains something of a challenge as Vola acknowledged.
“Corruption you can not just erase from the face of the earth,” she said. “But [it] has become much less of an problem. “You can [be] business compliant and still be very successful in the market.”
Russian Transport Lines chairman, Konstantin Skovoroda, echoed the potential of the domestic market at the Congress, although hinted there was still a considerable amount of red tape to go through in order to do business.
“We still have a very difficult situation in Russia,” he said. “You have to communicate with State authorities.”
Chairman of Basic Element – GAZ Group owner – Oleg Deripaska – recently commented more than two-thirds of the Russian Federation depended on the State.
