Auto suppliers expand their presence in Russia image

Russia’s auto parts industry is expected to improve as suppliers such as Visteon and Robert Bosch increase their presence in the market and component makers such as GKN Driveline, TRW Automotive and Getrag consider setting up operations there.

The suppliers are being drawn to Russia by automakers that hope to capitalize on forecast growth. Russia’s new-vehicle sales are expected to rise to 4.4 million by 2020 from 2.9 million last year, according to consultancy Boston Consulting Group. If that happens Russia would pass Germany to become Europe’s largest new-car market.

The problem is that only about 25 % of the parts on locally built cars are produced in Russia. That figure, however, is expected to rise to 30 to 35 % in the next 18 to 24 months.

Bosch is currently building a second automotive parts factory in Russia. The new plant will be based in Samara, the same state as Renault-Nissan-AvtoVAZ’s massive Togliatti factory. Bosch said that by 2015 it plans to invest about 40 million euros in the new location, where it will make antilock braking systems and alternators, mainly for local customers.

Visteon strengthened its position in Russia last October when it increased its stake to 69 from 49 % in its interior electronics joint venture with Russia’s Avtopribor. The move made Visteon a majority shareholder in one of Russia’s leading cockpit electronics suppliers, said the company, whose customers include Ford Motor and Renault-Nissan-AvtoVAZ.

Among the suppliers investigating whether to build a factory in Russia is GKN Driveline.
“As the car companies move into Russia they’re looking for companies like GKN to move with them to supply local content,” said James Voeffray, head of program management and strategy at the driveshaft maker.

Other suppliers are eyeing Russia. Transmission maker Getrag is working on a plan for Russia and safety specialist TRW Automotive is also interested in the market. Carmakers are looking to source more parts from Russia to cut costs and to meet a government-mandated target of having 60 % local content to qualify for reduced import tariffs.

Via Automotive News Europe