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Russia: Economic sanctions won’t destroy the auto industry – minister

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Russia: Economic sanctions won’t destroy the auto industry – minister

Situation is very fluid after Russia signed an agreement to absorb the Crimean peninsula .

United States and the European Union are now ready to impose economic sanctions against the Russian Federation – and a summit between Russia and EU that was planned for June is expected to be canceled.

However, the Russian deputy minister for industry and trade, Mr. Alexey Rakhmanov told reporters during a press conference in Moscow that the auto industry will survive.

“I am not expecting any dramatic shake-ups on this but if something happens, so be it.”

“We have been absolutely serious about attracting foreign investment to Russia’s auto industry in recent years and to spoil it in one moment is a silly exercise,” said Rakhmanov.

The auto industry in Russia is one of the largest employers – employing around 600,000; that’s about 1.2 percent of the country’s total workforce.

Last year car sales contracted by 5.5 percent from a record 2012 – but still some analysts are saying that the Russian automobile market is poised to overtake Germany and become Europe’s largest by 2016.

“Fundamentally it’s an attractive market in terms of cars per thousand inhabitants and therefore we are bullish long-term – but that doesn’t mean that every year will be a good year,” BCG partner Ewald Kreid said.

But if sanctions are to continue – General Motors and Ford have the most to lose among global car manufacturers. Last year General Motors sold 174,649 vehicles in Russia.

Already Ford is planning possible production cutbacks.

“The latest situation is very volatile and we are closely monitoring it,” Stephen Odell, Ford Motor Co.’s European chief

by Mircea Serafim (my Google+) - Friday, March 21st, 2014 - filed under Industry, News. Image credit: .
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