Russian Auto Industry

Kiko wrote:Earlier in the day, Zelensky addressed the parliament in Paris via video-link and demanded that French companies “must quit the Russian market” and stop financing what he called the “Russian war machine.” He specifically named Renault among the examples.

These retarded idiots then proceed to eat this talk from the entertainer hook line and sinker. Good. These are basically extractive businesses which funnel their profits abroad anyways. In the long term the Russian economy will be better off without them. If a country like South Korea can have a decent car industry there is no reason why Russia cannot have the same. Not when they have all the raw materials to make cars and a large enough market. There is also no shortage of qualified technical staff. France was selling what is a low end budget car in Russia similar to the one they sell in Romania with Dacia with a different shell on it and getting 8% of its annual profits from that.

A pretty decent little operation. If Renault choose to dump it this is their problem. Not Russia's. Lots of Chinese companies make cars with similar quality. And much lower price.
Renault's Dacia unit is a loss making enterprise as it is. I wonder what will happen to it once it loses the Russian market.

The notion that a civilian car industry which sends its profits abroad "finances the Russian war machine" is ludicrous. The truth is most of the sanctions which they could have done to impact the Russian war industry have already been done in 2014. Yet the Russian MIC continues and grows in strength. I am sure not selling any more luxury handbags will also stop the growth of the Russian MIC. Lol.

GarryB wrote:This will be one of the aspects Putin would have thought about when considering his options... and honestly a complete split economically with the west will likely benefit them in the long term... if it was to wake up some western countries to the fact that the US does not care about any country at all... not even the US... it only cares about making the super rich slightly richer and that making their own decisions and caring about their own people should be the way forward for them, then perhaps it would even be good for the west, but the west is not Putins problem... Putins problem is Russia and its peoples well being and he is doing it a favour by getting the west to cut ties so it is free to pivot to Asia and Africa and America from Mexico south... the important parts of America...

A car is a functional device to get you from place to place... the west has turned them into something else... status symbol... metal penis... etc etc, which has created an enormous range of types and designs which are totally unnecessary and useless for the world... they have done the same with a lot of things like coffee, and now cell  phones.

One thing I've noticed is that since about 2010 or so, cars have barely changed.
Maybe a slightly bigger media screen/satnav etc (altho a better one can be added aftermarket)/ But everything else - looks, appearance etc has barely changed. The latest gimmick is antiRussian hybrids. Pure electric is plain daft right now for many reasons.

Personally I'd rather have a nice car which is a few years old, than some brand new shit that will depreciated in value quicker than a moldy sandwich.

What cars will Russians drive?, by Olga Samofalova for VZGLYAD. 30.03.2022.

The Russian car market found itself in a difficult situation - it is threatened with a halving in the number of sales of new cars. Even Renault, which invested more in Russia than others, could not withstand political pressure. At the consumer level, there are shortages, skyrocketing prices, and dubious deals. However, AvtoVAZ is preparing to release imported models soon. What will these cars be?

AvtoVAZ has officially announced that it will soon launch special versions of Lada cars on the market, in which the maximum import substitution in terms of components will be achieved. Unofficially, it became known what kind of models they will be and how they will be modified in the new conditions.

As  the Russian Automobile Telegram channel writes  , citing its sources, the car factory will bring to the market modified “originally Russian models” Lada - these are Granta, Niva Legend, Niva Travel and Vesta. It was these four models that were created on their own Russian platform. Whereas the Largus and XRAY models are not included in this list, since they are already built on the Renault-Nissan B0 platform and are more tied to Renault suppliers.

The “import-substituted” version of Granta should be the first to enter the market, which will be left without ABS, ESP, vehicle dynamic stabilization system, airbags and the ERA-GLONASS emergency communication system. In addition, the model will lose one or two oxygen sensors in the exhaust system, as a result of which the environmental level will drop from the current Euro-5 to Euro-2. The engine control unit and its firmware will also become easier. The pool of Renault suppliers for this model will be replaced exclusively by Russian companies. For such simplified vehicles, the Ministry of Industry and Trade of the Russian Federation plans to introduce relaxations in the technical regulations.

According to Avtostat, for the production sites of AvtoVAZ, imported components make up no more than 20%. This is a full-cycle enterprise with its own metallurgy, press production, production facilities for auto components, including power units and chassis, as well as its own scientific and technical center. Earlier, the authorities of the Samara region prepared an order to create a single car assembly plant on the basis of the three currently operating ones. This production line will be equipped with the necessary parts and accessories.

“In my opinion, this is quite a possible story for the plant. AvtoVAZ has experience in the production of cars without ABS, because initially the installation of an anti-lock braking system was not provided. And now ABS is mandatory only on public transport, but not for private cars. We still have a lot of old cars on the road out of a 40 million fleet that do not have ABS installed. From the point of view of security and progress, this is all, of course, wrong, but such is life,” says Sergey Udalov, executive director of the Avtostat analytical agency. This also applies to airbags.

“The increase in environmental requirements for a car was introduced in a civilized community within the framework of global agreements. This was also required for the supply of machines for export to Western countries with stringent requirements. But in the current conditions, probably not up to Euro-5,” adds Udalov.

In his opinion, the consumer will be ready to buy such a car without ABS, airbags and something else, if it costs less, which would be logical. Although this will not affect the overall traffic safety in the best way. However, you should not expect a super-budget car without designated options either. “The cost of production, if roughly, is unlikely to decrease by more than 10%. Consumer cost is likely to decline. If AvtoVAZ is able to produce and sell more of these cars, then the market will work, and the dealers themselves will reduce the markup so that there is something to work with, what to sell and service, ”the expert believes.

The question remains with accessories. “There may be problems with Vesta, since this model was already produced under Anderson (a Swedish top manager who headed AvtoVAZ). And in this model, many imported components were provided. But even on historical VAZ models, many components were replaced with products from global suppliers,” says Udalov.

Perhaps parallel imports, which are planned to be allowed, will help resolve the issue. AvtoVAZ is probably looking for different opportunities to replace certain missing components. “Automakers usually have two or three suppliers for a particular type of component. Conventionally, one company supplies brake pads to Grant, another supplier to Vesta. Therefore, one of them can quickly develop and start producing these pads not only for Grants, but also for Vesta, ”the interlocutor argues. Some parts can be produced in Russia, some can be found in China or other Asian countries.

“A lesson to be learned from this story. We were unable to do a normal localization in the automotive industry. We tried, but then we realized that it was more efficient to be integrated into the global auto industry. It is more profitable to buy something there, to produce something at home, to create something for export”, says Sergey Udalov.

The situation in the Russian automotive market is now more like chaos and devastation. “This is panic, rush demand, the lack of an understandable price in the face of shortages and the absence of any competition. Prices for cars that used to be considered budget cars are now higher than for apartments,” says automotive expert Igor Morzharetto.

In Russia, "exotic" transactions really began to be carried out: cars were exchanged for real estate, which discouraged realtors. For example, a 2021 Kia Mohave SUV with a mileage of 10,000 km was offered to be exchanged for an apartment in Makhachkala worth at least 7 million rubles. There was a surge in trips to Kazakhstan to buy cars. But we must remember that a car is not an investment, but a means of transportation, says Morzharetto.

“Importers have raised dealer car prices by 40% or more, and one premium brand has raised prices by 56% since January 1st. The main increase occurred in early and mid-March. It was probably one of the most significant rises in prices in recent years. The final cost of cars for customers has grown even more – by 60-70%”,  says Andrey Olkhovsky, General Director of AVTODOM Group of Companies. At the same time, there is a shortage of cars in the salons. “For spare parts, the situation is even more complicated - a complete set for a car is needed to carry out repairs, and if some sensor is missing, then repairs may not be made,” says Olkhovsky.

European and even Japanese automakers have stopped the export of cars to Russia. One by one, local car factories of foreign brands have suspended their work. Plus, there were logistical problems due to the refusal of the three largest container transportation operators to deliver goods to Russia.

“The suspension of Renault in Russia is the penultimate wake-up call. This company has invested the most in the Russian market, and it is sad that they also suspended production,” says Morzharetto.

It was Renault that not only opened its own auto production in Russia, but also became the main shareholder of AvtoVAZ. The French provided their platform for creating models under the Lada brand, attracted their own global suppliers of components, etc. Therefore, it is economically unprofitable for the company to leave Russia, of course. Their decision is connected with political pressure.

“Renault will wait to see how the situation develops by freezing the current state. In the worst case, he will try to sell his stake in AvtoVAZ, but who will be ready to buy it now, that's the question, ”says Udalov. In his opinion, while automakers are trying to solve tactical problems - how to produce cars and save jobs, and do not think about strategic tasks.

There is a good chance that it won't be the same as before.

If European and Japanese car brands do not return, then the Russian car market will consist of Russian Lada cars, Chinese and, apparently, Korean brands, considers Udalov. The second and third will probably be the way out for those who are willing to pay more.

Together, this trinity occupies 46% of the new car sales market in the first two months of 2022, Udalov calculated. Lada accounted for 22%, Chinese brands for almost 10%, Kia and Hyundai for another 24%. This means that Russia will lose a little more than half of the automotive market. Those who stay, of course, will have the opportunity to increase their presence in the Russian market.

https://vz.ru/economy/2022/3/30/1151071.html

It is like I expected. They will relax the energy and emission standards to get vehicle products out. Makes sense.
Russia needs to make the facilities to produce the electronics for vehicles in Russia. The factories and the chip designs.
In the current automotive chip shortage a lot of companies were already removing as many chips from their cars as they could.

Russia should make it so all new car designs will have a degraded mode where they can run without these electronic doodads. You should not need chips to get a working car. Sure it will have degraded functionality but it should still work.

Plus like I said they should import modern Chinese engine designs and manufacture them in Russia. Modern Chinese engines are not any worse than Western ones and sometimes are even better.

With inflation skyrocketing in the West, middle-class customers will find it increasingly hard to buy sophisticated, utterly expensive cars. So they'll look up for simpler and cheaper models as an alternative.

GAZ has developed a six-speed automatic transmission. It has already passed the tests

GAZ reported on successful testing of the latest GMP800 automatic transmission system developed by the Group. It is designed for buses, trucks and special equipment manufactured by GAZ Group with the YAMZ-534 engine.

GMP800 was developed by a group of OIC engineers led by Andrey Yuferov.

But this is not just a project: Its production has already been mastered at the Nizhny Novgorod Motors plant, where a pilot batch has already been produced, which has successfully passed laboratory certification tests in the OIC and at the NAMI Central Research Automobile and Motor Institute training ground.

Moreover, the new automatic transmission successfully passed the resource tests. According to the publication Avtozavodets:

To thoroughly test the automatic transmission in action, the private carrier Meshcheryakov & K LLC in Nizhny Novgorod was given six Vector NEXT buses with a new box for trial operation on urban passenger routes. Currently, these vehicles operate on the T-88 route (Kuznechikha-2 microdistrict-Dachny settlement in the Leninsky district), and all last year they "mastered" the T-45, T-59 and T-67 routes. All of them connect the mountainous and zarechnaya parts of the city, all with climbs and heavy traffic.

"The pilot operation of buses with automatic transmission gave positive results in terms of technical characteristics, reliability and comfort of the driver and passengers. The introduction of an automatic transmission is another step towards improving the consumer properties and increasing the competitiveness of GAZ Group equipment, " said Andrey Yuferov, Chief Design Engineer and Head of the R & D Department

In general, the new automatic transmission is tested on 14 different models and modifications of GAZ vehicles. Vehicle type approvals have already been obtained for the GAZon NEXT chassis and flatbed truck, as well as for the Vector and Vector NEXT buses.

Source:
https://sdelanounas.ru/blogs/146410/
https://zen.yandex.ru/media/sdelanounas.ru/oboidemsia-bez-importa-gaz-razrabotal-shestistupenchatuiu-akpp-ona-uje-proshla-ispytaniia-62546ecb00fb643158ff2830?&

What will the Chinese do with AvtoVAZ, by Olga Samofalova for VZGLYAD. 26.04.2022.

The share of French Renault in AvtoVAZ may be sold, according to unofficial information, to a Chinese automaker. Twenty years ago, this was unimaginable. Then the Russian authorities gave the green light to Western concerns, leaving the Chinese auto industry out of the Russian market. However, now the situation has changed dramatically.

Renault continues negotiations on further participation in the capital of AvtoVAZ, said Thierry Pieton, financial director of the French automaker. At the same time, he refused to disclose the details of negotiations with the “Russian authorities”, saying only that the French side managed to “make progress”.

According to Gazeta.Ru sources, structures of the Ministry of Industry and Trade or the Rostec Corporation are named as possible new owners of the plant. According to a source from the TASS agency, one of the Chinese automakers can buy Renault's share. “One of the Chinese automakers is being considered,” a government source said.

Until the end of 2021, the Dutch Alliance Rostec Auto BV was the owner of 100% of AvtoVAZ, where the state corporation Rostec owned 32%, and Renault Group 68%. At the end of 2021, the transfer of 100% of AvtoVAZ shares to Russian jurisdiction was completed under the auspices of a new joint company, Lada Auto Holding. The shares of Rostec and Renault Group remained the same.

“The Chinese may be interested in the Russian market, because it is quite large and now there are more opportunities due to the withdrawal of European companies from the market,” said Sergey Udalov, executive director of the Avtostat analytical agency.

Chinese brands were able to double sales of new cars last year. According to Avtostat, they sold 115,700 new cars in Russia, which is 102% more than in 2020. This is a record figure for the entire time of the presence of Chinese brands in the Russian market. And the share has grown to 7.5% in 2021, and this year to 10%, Udalov notes.

“The Chinese are expanding the model range for Russia, the reputation of Chinese brands is growing, as is the interest in them from buyers,” says Udalov.

However, Chinese automakers had a hard time entering the Russian market. When 15–20 years ago, active foreign expansion of automobile concerns into Russia began, the Russian government gave preference to more eminent and already won a name and reputation for Western brands - European, American, Japanese and Korean.

The Russian authorities did not really want to see the Chinese auto industry in Russia. The Chinese did not particularly want to localize their production on our territory. The auto industry from the Middle Kingdom was just beginning its formation, in terms of quality and service it lagged far behind eminent Western competitors. At first, the models of Chinese brands very much outwardly resembled copies of their Western counterparts. However, the Chinese auto industry has changed quite quickly. But by that time, all the tidbits of the Russian market had already been acquired by Western rivals, who built their own car factories in Russia with the support of the Ministry of Industry and Trade, and even began to produce some auto components on our territory.

However, since then, not only the Chinese auto industry has grown a lot, but the geopolitical situation has changed dramatically. The departure of Western car brands from Russia, which they, at least, announced due to pressure from parent companies in Europe and the United States, opens up huge potential for the Chinese car industry to conquer the Russian car market.

The overall share of Chinese in Russia, of course, has grown, but we are talking about ten Chinese brands. Moreover, only three Chinese brands have achieved any relatively significant presence in the Russian market, which accounted for 87% of sales of the total number of Chinese cars sold. These are Haval (first place), Chery (second) and Geely (third), which sold 25-40 thousand cars a year last year. But many Chinese companies have to settle for much more modest sales. Changan, EXEED and FAW sold between 3,000 and 6,000 units a year. Chinese brands GAC, Lifan, DFM - less than a thousand, but more than 500 cars a year. And Brilliance sold only 110 cars last year, Zotye - only 51, Foton - 37. Definitely, many of them have room to grow.

Which of the Chinese could be interested in the share of AvtoVAZ? There are, in fact, many options. This may include a completely unknown car brand on the Russian market, which is doing well in the Chinese market and is making plans to expand markets abroad. Or, on the contrary, a Chinese manufacturer who is not very comfortable in the domestic Chinese market, so he wants to succeed in the Russian one.

“There are more than 100 car brands in China itself. At the same time, China's own automotive market is large and not yet saturated. And the internal requirements in China for the automotive industry, in particular, for the design of machines, are being tightened, ” says Sergey Udalov.

It is logical to assume that someone who is present in Russia is showing interest. “But Haval already has production in Russia. Geely has production in Belarus, and the company did not plan to have an assembly plant in Russia. In addition, Geely has European shareholders who support sanctions, so it will be politically difficult for this company to become a shareholder of AvtoVAZ. Perhaps this proposal may be of interest to the second Chinese player on the Russian market, Chery. The Chinese company Changan also has unrealized opportunities in Russia: it has a very large and interesting model range. Potentially, Lifan may also be interested in AvtoVAZ,” says Sergey Udalov.

Whoever becomes the new owner of AvtoVAZ, one should hardly expect from the Chinese the same approach to the development of the Togliatti plant that Renault had. The French shared their own platform with AvtoVAZ, on the basis of which new models were created under the preserved local Lada brand. That is, they treated the Russian automotive heritage very carefully, which was probably a necessary condition at one time for the sale of a controlling stake in AvtoVAZ to this particular Western concern. Renault integrated AvtoVAZ into the global automotive industry, new models were created from foreign components and spare parts. Now it's all gone sideways because of Western sanctions.

The Chinese consider AvtoVAZ, rather, as an assembly site for cars under their own brand.

Sergey Udalov believes that the new owner of AvtoVAZ cannot afford to completely abandon the Lada brand, which occupies 20% of the market. AvtoVAZ has its own platforms, with the help of which it is possible to produce budget cars, from the sale of which the new owner will receive good dividends. We are talking about cars Niva Legend and Niva Travel (former Chevrolet), Lada Granta and Lada Vesta. Difficulties may arise with the latter, since quite a lot of foreign components have already been used in the creation of Vesta.

“Secondly, the Chinese will most likely want to assemble their own cars, expand the range of models and increase their share in the Russian market,” Udalov says.

Previously, the government of the Russian Federation would hardly have agreed to this. “I think that in the current situation, the government is ready to go to great lengths to save jobs, so that the auto industry and component suppliers continue to work, so that the range of cars remains on the market, and car prices are affordable,” Udalov said.

In addition, the expert adds, the deal with China gives the Russian car industry access to the Chinese market for components and materials, which, under sanctions, is extremely important for the preservation of the Russian car industry in general. “If Rostec buys a stake in AvtoVAZ, then components will have to be sought for purchase. And when selling a share to the Chinese, the story with the components would take on a different meaning. We could already talk about the production of automotive components within the country,” says the expert of Avtostat.

Not all experts see the point in selling AvtoVAZ's stake to Rostec. “Because of this, the production of cars at the enterprise will not resume. Rostec itself is under the sanctions of the West, and for the production of cars, capacities are needed for the production of components, primarily electronic ones. And all of them are localized in the USA, Europe or China. Therefore, the arrival of a Chinese concern at the plant is the best option both for the enterprise itself and for the Russians. Chinese manufacturers have a modern base to produce cars with electronic components that AvtoVAZ lost due to Western sanctions,” said Artem Deev, head of the analytical department at AMarkets. For the Chinese themselves, this is a way to cut costs and produce cars on the Russian market at relatively lower prices than if they were delivered from China.

However, Sergei Udalov is inclined to believe that this story is no longer about the sale of AvtoVAZ's stake to the Chinese, but about a multi-layered deal with Renault.

“Alternatively, we can talk about the transfer of Renault's share to the management of Rostec with the preemptive right to buy back this share by the French.

I believe that Renault, from a business point of view, would not want to leave the country. But if it is necessary to leave, then he would like to be able to return to Russia when the situation is resolved. Moreover, the Russian automotive market after its freezing will become even more promising than it was. But it is unlikely to be a public story,” says Sergei Udalov. And the problem of auto components will be solved, among other things, by allowing parallel imports. The necessary Western parts can be obtained through third countries, including through China, bypassing official suppliers.

https://vz.ru/economy/2022/4/26/1155533.html

I think the article makes a lot of assumptions that are simply untrue.

The factory Haval built in Russia at Tula is the largest factory with the most complete cycle they have anywhere out of China proper.
Proof of that is Great Wall Motors are even building a factory to manufacture engines there. The factory is expected to be operational this year.
Supposed to manufacture 80,000 engines a year. They clearly consider this to be a major investment and not just a body assembly operation.
https://www.haval-global.com/news/1155973.html

I can understand the Russian government not trying to burn out Renault after they made large investments in Russia. But the thing is I think everyone should just stop thinking about them coming back later. Russia should just get their share and take their time working out a proper deal with a Chinese investor later. And since a lot of the investment may need to be scrapped as the production will be different, and Russia will have to take care of the workers, Russia better get that factory on the cheap. Russia needs to get a proper deal on the operations there. A more comprehensive deal than the Haval one. One which will increase the depth of the Russian industry and have a completely localized chain for the mass models in long term. With a design center located in Russia which can make modifications to the base platform. Even if Russia needs to make AvtoVAZ 100% state owned and just cooperate with the Chinese to do it, it would be better than just having another body assembly operation. Plenty of those already. If needs be Russia should just make it a government operation and license a car engine design from the Chinese and make their own platform.