General Motors and Ford want their Russian-built vehicles to have at least 60% local content within the next few years to reduce shipping costs.

Stephen Biegun, Ford’s international affairs chief, told a US-Russia Business Council forum in Detroit that Russia “could be the biggest market in Europe by next year even though it remains a challenging place to do business”.

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The road infrastructure is still being built and the supply chain is further hampered because imported parts must clear customs. On the plus side, he added, the country has natural resources, special economic zones with pre-built roads, electricity and communications, tax breaks and low tariffs to entice industrial investment.

Unlike western Europe, where sales continue to slow, the car market in Russia is forecast to remain flat after a period of rapid growth, said James Bovenzi, head of GM Russia. Nearly 3m new cars were sold there in 2012, double the level of 2009.

Bovenzi said that the first thing he did when GM was launching its plant in St Petersburg, was build a warehouse to house parts that took up to 25 days in transit. Now they take 10 to 15 days. The company also partners with GAZ for CKD kit assembly.

GM already has some 100 Russian suppliers who provide 20% of parts at St Petersburg. The target is to source 60% locally to get around high logistics costs and currency exchange, said Bovenzi.

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Ford has three plants in its joint venture with Sollers and a capacity of 120,000 vehicles a year. Biegun said his company plans to increase capacity to about 300,000 and add engine and stamping facilities.

He added that Ford also wants to boost its local sourcing to 60% of its Russian-built vehicles by 2015.