Foreign car makers go into high gear in Russia

"Now there are some 15 main global players that have already come to the Russian market and are interested in its further growth," said Stanley Root, an analyst from the Russian branch of the consulting company PricewaterhouseCoopers. Especially as many analysts agree that Russia is about to become one of major world markets for years to come. Root said the volume of Russia's automotive market "could double in five years."

"If the market continues to regain the growth rate it had (before the global crisis), we could see sales increasing from 1.9-2.5 million (cars) this year to 3.0 million and perhaps beyond," he said. "The (car) fleet (in Russia) is aging," said Ivan Bontshev of Ernst and Young, adding that, compared to other countries, in Russia relatively fewer people have cars. Aware of these encouraging prospects, the authorities have decided not to miss the chance to boost the industry.

"The government realizes that it is really important to keep core industries that employ large numbers of highly skilled engineers," who may participate in the modernization of Russia's economy, Root said. All the more since the car industry is a big employer, both directly and indirectly. Moreover, the authorities know that Russian manufacturers can not survive in a highly competitive international market unless they develop alliances with major foreign manufacturers, Root added. In this context, they undertook a series of provisions to push major global groups to ally with Russian partners, such as tax reductions on machine parts' import in case at least 300,000 cars are manufactured per year.

Copyright AFP (Agence France-Presse), 2011

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