/ world today news/ With the help of state subsidies, Russian cars can regain their positions in the markets of Asia and Africa, experts note.
The Russian government has decided to take an unprecedented step to support the auto industry, allocating 3.3 billion rubles ($50 million) worth of export subsidies for the first time in the country’s recent history. The relevant decree was signed by Prime Minister Dmitry Medvedev.
According to the document, with the help of subsidies, Russian automakers will be able to cover up to 80% of the costs of transporting the cars, as well as half of the necessary funds for placing the cars in new markets and all the money for bringing them into line with international environmental standards.
The idea of active state support for the export of cars was born in 2015 against the background of the devaluation of the ruble. “The government is interested in increasing the export of production from Russia, including goods with a higher added value, and the automotive industry, of course, falls into this category,” Vladimir Bespalov, an analyst at VTB Capital, told Russian Daily “.
New opportunities for “AvtoVAZ”
Over the past year, according to data from the Avtostat analyst agency, the export of passenger cars from Russia abroad has grown by 64%. “The devaluation of the ruble gives Russian manufacturers an opportunity to regain markets in Asia and Africa, which they left due to the inability to offer a competitive price,” commented Vladimir Bespalov.
The largest car manufacturer in Russia, AvtoVAZ, whose main shareholder is the French-Russian group Renault-Nissan, exports nearly 10% of its total production volume. “Our strategic task is to increase the figure to 20% in the medium term, but the specific terms depend on the economic situation,” AvtoVAZ spokesman Sergey Ilinsky told Russian Daily. According to him, the company already successfully exports models of the new generation – Lada 4X4, Lada Granta, Lada Kalina – and all of them meet the Euro-6 international economic norms.
The main markets for AvtoVAZ cars in 2015 were the former republics of the USSR: Kazakhstan, Azerbaijan, Belarus, as well as Egypt and Germany, with car exports falling by 45%, the company’s annual report states. According to Vladimir Bespalov, this sharp decrease was caused by the devaluation of the national currencies in the markets of the former republics of the USSR, which traditionally buy Russian cars.
However, the company’s deliveries to other countries increased by 49% in 2015, according to data from “Avtostat”. “Today, the production of “AvtoVAZ” is absolutely competitive in its niche on the world market – it is a cheap, easy-to-use and serviceable vehicle with good characteristics for its price segment,” Bespalov points out.
Another Russian automobile giant, the truck manufacturer KAMAZ, feels much more confident in the export markets, which at the end of 2015 reported an increase in its exports by 8.2%, as the share of deliveries abroad (without the countries of CIS) has grown by 45%. Today, the company delivers 22% of its cargo trucks abroad, mainly to the former Soviet republics: Kazakhstan, Turkmenistan and Lithuania, and also to non-CIS markets: Vietnam and the United Arab Emirates. In addition, “KAMAZ” already markets limited quantities of cars in Peru, Ecuador, Indonesia and India, and “AvtoVAZ” – in Peru, Chile, Serbia, Slovakia and Bulgaria.
Foreign brands of Russian production
In 2015, new car sales in the domestic market fell by 36%, according to data from the Association for European Business (AEB). Because of this, some manufacturers in Russia ended up with excess capacity, notes Vladimir Bespalov. To burden them, companies are now actively looking for potential markets to market their products, and covering transportation costs contributes to this, the expert points out.
All international players registered and producing cars in Russia can count on subsidies. “We hope that these measures will help us to fulfill the export projects. How exactly will become clear after the necessary steps have been taken to sign the documents specified by the decree”, commented Ekaterina Tretyakova, press officer of “Renault Russia”.
International companies are exploring opportunities to supply markets abroad. Nissan plans to supply the Datsun model, assembled in Russia, to the Middle East, while Hyundai is considering exporting cars made at the plant near St. Petersburg to Georgia and Tunisia.
The Renault representative said it has plans to export the Logan and Sandero Stepway, which are assembled in Moscow, to Vietnam.
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