Russian Automobile Industry Essay

Russian Automobile Industry

The car industry in Russia has extremely grown up in the recent old ages. With the production of about 1million vehicles in 2005, Russia was ranked as the twelfth largest maker of vehicles in the universe. After the flourishing economic system, there has been a sudden high demand for bran-new domestic every bit good as foreign brand vehicles, which has about wiped the foreign used autos market in Russia.

The growing in the demand of foreign trade name vehicles has gone far beyond the best of the anticipations made by Russians. In the long term, Russia shall be a better market for both production and sale of cars. As per the research, sale of new autos will make 2.5 million in Russia by 2015. Besides, some of international providers shall hold their ain merchandises in the state. But it ‘s a little sum of merchandises compared to Russian merchandises.

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Former president of Russia, Putin tried to hike the auto industry, power coevals and to better the handiness of mortgages. He put a new regulation to hike up the auto industry, that is,

“Any Russian citizen, who uses a auto 10 or more old ages old, will have a cheque for 50 thousand Roubles and will be able to utilize that money to purchase a new auto. It does n’t count what auto he will purchase, Russian or foreign, every bit long as it is assembled in Russia.”

Future of the Russian auto industries

The sum of new vehicles in Russia will increase from 1.2 million in 2004 to 2.4million by 2014. This is approximately 6.5 % per centum per one-year growing rate. New auto imports to Russia will surge from 350,000 a twelvemonth in 2004 to 750,000 a twelvemonth in 2014. At the same period, the figure of new foreign autos assembled in Russia will lift from 100,000 to 800,000.

Soviet union: market of the hereafter

After China, Russia is one of the fastest-growing car markets in the universe. Between 2004 and 2014, each twelvemonth will see around 100,000 more new autos registered than the old 1. The sum will lift from 1.4 million new autos in 2004 to 2.6 million in 2014 ( 6.5 % per one-year ) . More and more Russians are exchanging to Western auto shapers: while Russian auto shapers presently cover 70 % of demand, 60 % of new autos bought will be manufactured by foreign shapers by 2014.So, Russian autos are take chief topographic point in the market every twelvemonth. This will do good net income for their state.

Prospects for providers

Automobile providers can besides profit from the dining auto market in Russia. At present, the top 20 providers worldwide have about 200 production sites in Europe ; but there are merely six or seven companies with some locations in Russia.

Harmonizing to this, Car shapers will affect their providers more in making value in future. Between 2004 and 2010, providers ‘ portion in production value for Russian auto shapers is set to lift from 30 % to 40 % . Amongst international auto shapers, this proportion is already high, anyhow this is to be rise to 70 % by 2010.

And international auto shapers are set to duplicate their production from local providers to pull off the Russian demand. This will direct local content surging from 10 % in 2004 to 40 % by 2014.

As an international shaper expands their merchandises in Russia, they will do a high-performance provider industry behind them by 2014.

Overhauling Russian auto companies

Overhauling auto companies besides offers new chances for Russian auto shapers and providers excessively. But besides local auto shapers and providers must overhaul their procedures and merchandises. Western companies have to take a interest to overhaul the Russian provider industry. Russian providers can take Western engineering, will happen themselves upgrade more efficient production procedures and can present good quality direction to nowadays criterions. So for this their international spouses will acquire entree to Russian clients and local governments.

The Russian car sector has to overhaul across the board. This will assist the degree of investing in Russia compared with other states. Germany invested EUR 2,343 for every auto made in 2002, while Russia invested merely EUR 465. Other states in Eastern Europe besides invested much more. While Russian makers spend less than 1 % of their gross revenues on research and development, international shapers here spend 5 % of their gross revenues or more.