A couple of days before, the South Korean auto giant Hyundai held a groundbreaking ceremony for another plant. And on June 10, France's Peugeot Citroen and Japan's Mitsubishi Motors plan to break ground for a joint venture.
The Russian auto market is gaining speed: last year its car sales surpassed 2.7 million vehicles, or almost one-third as many as in the previous year. And 1.6 million were foreign models, according to the European Business Association in Russia.
Foreign cars have crossed the 10 million mark, practically catching up with Lada, the traditional leader. While in the 1990s, the foreign numbers expanded through used imports from Western Europe and Japan, now almost two-thirds are new cars. And each year more and more of them are assembled in Russia.
The first company to enter the Russian market was America's General Motors. At the end of 1996, it and the Yelabuga auto plant opened a joint venture amid great pomp to assemble the Chevrolet Blazer SUV. The year after, Avtotor in Kaliningrad began screwdriver assembly of several South Korean Kia models.
The example caught on. Delegations from European manufacturers flocked to Russian ministries. The plans to build were Napoleonic. But then the Russian financial crisis struck, and Western companies decided against risks, opting for a timeout, although they did not plan to quit Russia altogether.
GM-AvtoVAZ general director, John Milonas, said the Russian market was huge, and large players would never ignore it.
The much-awaited moment arrived in 2002. Not far from St. Petersburg, Ford Motor Company launched a car assembly operation. A couple of years later, the Taganrog auto plant launched mass production of the South Korean deluxe Hyundai Sonata, while the next year Kia Motors found a new partner and launched the production of the Kia Spectra in Izhevsk.
Proposals followed fast and thick, and many were translated into projects. Last year, outside Kaluga, Volkswagen put a plant on stream, and Toyota introduced its first Toyota Camry in Shushary in the Leningrad Region. In Kaliningrad, which is a free economic zone, several brands of foreign cars are assembled: Chevrolet, BMW, Cadillac and Hummer. Ssang Yong jeeps are assembled in Naberezhnye Chelny, and Renaults are produced at Moscow's Avtoframos.
In 2010, according to the Economic Development Ministry, Russia will produce more than a million foreign cars. Analysts at the European Automobile Manufacturers' Association are predicting that the Russian car market will become the second largest in Europe. And that target is likely to be reached ahead of time.
Last year's agreements alone provide for investments totaling $1.8 billion. And, analysts say, Russians will spend $65-70 billion on cars in 2008, compared with $47 billion last year. All in all, 3 million new cars will be sold in Russia. Combined with used cars, which is another 300,000, Russia will equal the German market, Europe's largest. In 2011, when several large foreign enterprises go into operation at once, their combined output will reach a record of 5 to 5.5 million, and Russia will leave Germany and perhaps Japan far behind, moving to third place in the world, after the United States and China.
At the same time, the share of Russian-made models is steadily declining. Last year it shrank by one-quarter. As foreigners gained new ground, Russians voiced fears about their auto industry.
Russia's auto industry has had to adapt. Strong competition has forced it to abandon the "own efforts" strategy and partner with foreign companies. This enabled Vladimir Putin to say at the special economic zone in Yelabuga in May that the automobile industry had found a realistic and favorable way out by cooperating with strategic foreign investors.
He said this at a ceremony when the first mass-produced Fiat Ducato rolled off the conveyor belt. This is the first foreign model produced in Russia where 70% of the parts are Russian. The plant will also start manufacturing the sedan Fiat Linea, according to an agreement by Sollers and the Milan firm. The engines for it will be made by the Zavolzhsky engine plant according to another agreement.
The massive foreign expansion in the Russian car market has catalyzed the country's auto industry. Everybody benefits from this situation, above all ordinary people.
The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.
