Russian politicians are calling on domestic OEMs to look more overseas as demand gradually reaches its peak at home and as the country adapts to its recent accession to the World Trade Organisation (WTO).
The vast country sold almost 3m passenger cars and LCVs last year, but this is expected to dip slightly as the market faces challenging economic conditions, with some forecasting a nontheless robust total of 2.95m sales for 2013.
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“It is not a secret – in terms of sheer volume we will soon reach the peak demand of Russia,” State Duma [Parliament] Expert Council Committee chairwoman, Alfiya Kogogina, told the recent Russian Automotive Forum (RAF) in Moscow.
“That is why we need to look to the export market. Prime Minister [Dmitry] Medvedev had a meeting with technical expert [s] and as a result of that meeting, instructions were given to Ministries in the area of export support, compliant with WTO rules.”
The Committee chairwoman added the Russian Parliament had also worked with OEMs to prepare new measures aimed at stimulating production following accession to the WTO. “I hope this year that package will be approved,” said Kogogina.”
Equally, as part of its modernisation drive, Russia’s Ministry of Economic Development has also concluded 63 agreements with companies producing component parts.
Part of Russia’s challenge is meeting international environmental standards, with the Duma representative acknowledging pollution in Moscow alone is “around 5m tonnes of air particles” and promising to strive for improved modernisation incentives.
To that end Prime Minister Medvedev convened a meeting last week in Nizhny Novgorod – headquarters of Oleg Deripaska’s GAZ Group – to discuss the use of more natural gas for Russia’s enormous fleet of public transport vehicles.
The country has seemingly limitless reserves of gas and oil, but it appears the Russian Prime Minister, recently President, is keen to encourage the use of cleaner fuels both for public and private vehicles.
“We have to sign efficient legislation support and set up drafts that will stimulate the manufacture and buying of efficient [cars],” said Kogogina. “We allocate RUB3.5bn (US$111m) to subsidise buses for the Russian Federation that use gas fuel and it was not very well allocated.
“The money was allocated in the middle of the year and they got it at the end of the year. As of April, Russian regions did not have time to tender, but the main idea is to run this programme through [to] 2016.”
Despite the challenges of supplying domestic public transport energy, the Duma member nonetheless underlined the essential power of the Russian market that continues to significantly outperform its European counterparts, mired in economic stagnation and even recession.
“I would like to emphasise in the last Soviet times it [market] was 1.2m cars,” said Kogogina. “For the third year in a row, Russia is the second largest market in Europe.
“The German market dropped by 3% [and] France by 13%, so you can say 10% growth [in Russia] is pretty good. Last year the Russian government helped the automotive industry.
“We managed to turn around the situation in the motor industry – we like to compare the automotive industry with a locomotive pulling many branches.”
