The huge country, once dubbed as Europe’s contender to dethrone Germany from its sales leadership position, has been plagued by economic uncertainty, a falling local currency and huge political issues.
Naturally, the economy’s weakness and subsequent political turmoil have depressed consumer confidence, leading to a huge fall in registrations on the auto market. With many sanctions imposed by western countries and the Russian government threatening to hinder car imports, local players could gain unexpected benefits.
Renault-Nissan, which has opted for increased localization, according to its chief executive Carlos Ghosn, could reap increased benefits over the long-term. Many western carmakers have troubles in Russia now, but the alliance – which now controls market leader AvtoVaz – mulls an increased market position.
“Today the weakness of the ruble puts the car manufacturer that is more localized at an advantage,” says Ghosn. “Even though everybody suffers, those that are more localized can hold the line much better than those who are importing. You see, the market share of Renault?.?.?.?has been growing.”
The localization figure – or the percentage of locally sourced components – is at 75% today for Renault’s Russian built Logan sedans and Sandero hatchbacks, while for example at Volkswagen it only reaches around 60%.
Via Financial Times