Russia’s Industry Ministry says domestic automotive component manufacture is increasing despite the continuing struggles of the sector in the country, which has seen huge sales falls.
There is some evidence the catastrophic monthly collapses of -30% and more, are starting to ease as inflation starts to drop and the oil price continues its recent gains to reach US$50 per barrel, but the market still remains extremely challenging.
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The catastrophic implosion in Russian automotive sales has seen the Association of European Businesses (AEB) estimate the market to be around 1.5m units in 2016, with the rate of sharp decline evident from a number just two years ago of 2.49m.
Part of the reason why Russia has arrested its precipitous rate of decline may be the Kremlin’s decision to pump RUB50bn (US$780m) into the automotive industry, mainly through an aim to reduce car parc age, while lower vehicle credit and rental rates programmes will remain.
Russian companies will also receive financial support on their investment credits, with the State allocating funds to regional authorities, with Moscow also estimating domestic component manufacture is rising.
“Localisation is increasing, but production is decreasing 20% last year,” Industry and Trade Deputy Minister of the Russian Federation, Viktor Evtukhov, told just-auto on the sidelines of this year’s International Economic Forum (SPIEF) in St Petersburg.
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By GlobalData“Car makers have localised production, improved their production cycle and established car factories here. They thought about meeting the requirements of the Russian government, but also they need to produce more components here in Russia.”
Evtukhov echoed a popular theme at SPIEF as Russia battles to overcome sluggish home consumption; namely aiming to stimulate exports to soak up falling domestic demand, with a weak ruble making goods competitive.
“We are trying to support Russian exports, because even though we are trying to have better import substitution, we could not do without competitive products as suggested by our President and the Russian Export Centre,” added Evtukhov.
“Last year exports grew 10%.”
