/ Industry, News, Other / Russian Auto Output to Increase Risking Overcapacity

Russian Auto Output to Increase Risking Overcapacity

Linked In Share
Russian Auto Output to Increase Risking Overcapacity

Analysts believe that Russian auto industry is close to reach the same overcapacity problem with which the rest of Europe confronts.

The warning comes after Avtotor Holding formed a partnership in November with supplier Magna International, being the latest company to announce a major investment in Russia’s auto production. The two companies aim at establishing a complex of 15 parts plants and 6 assembly plants in Russia’s Kaliningrad province, which will manufacture 250,000 vehicles annually by 2018. The companies will invest $3.2 billion in this project.

Automakers are focusing more and more on Russia after strong growth made auto sales reach 2.9 million units last year, making the country Europe’s second-largest auto market, Germany being the largest market. Still, analysts are not sure whether the Russian market will continue to grow as industry sales were flat two months ago.

“We do not expect a quick return to growth in the coming months,” said Joerg Schreiber, chairman of the Association of European Businesses’ Automobile Manufacturers Committee.

This doesn’t seem to affect automakers’ future plans, a good example being VW which in December laid the foundations for a new engine plant next to an existing one in Kaluga. The German automaker said it plans to sell 500,000 vehicles annually in Russia by 2018. AvtoVAZ automaker refurbished part of the Togliatti facility to manufacture 350,000 vehicles annually together with its partner Renault-Nissan.

Ford and its partner Sollers have three assembly plants in Russia, and the two companies plan to open the fourth one. Due to all these investments in the country, 66% of new cars Sold in Russia are manufactured locally and LMC Automotive research group predicts this number will continue to increase.

“If everybody puts in capacity they say they might, there could be overcapacity,” said Carol Thomas, central and eastern European analyst at LMC Automotive.

Taking into consideration the prospect of overcapacity, Avtotor’s JV with Magna might seem a risky one. The two companies not only plan to boost production, but they also do this with one big advantage compared with other automaker: locally produced components. Even if production capacity becomes too high for Russia, automaker may at any moment begin exporting more vehicles to the other European markets.

“To be competitive you have to have local component production,” said Oleg Deripaska, owner of GAZ Group.

by Ana Cezara Savin (my Google+) - Wednesday, January 9th, 2013 - filed under Industry, News, Other. Image credit: .
Linked In Share
Related Articles
auto industry avtotor Magna International overcapacity russia


Discuss: Russian Auto Output to Increase Risking Overcapacity

Leave a Reply















Inautonews Facebook PageInautonews RSS FeedInautonews TwitterInautonews Youtube Channel

Sign up to receive our email newsletter on your email. It's safe. No spam!

Skoda Octavia RS Combi Diesel gets updated by mcchip-dkr
Skoda Octavia RS Combi Diesel gets updated by mcchip-dkrThe aftermarket specialists from mcchip-dkr have recently created an upgrade program for the diesel version of the new Skoda ...
Recall roundup: More than 200,000 Ford vehicles
Recall roundup: More than 200,000 Ford vehiclesFord has announced a recall which is covering more than 200,000 units because of a possible rusty fuel tank issue. A new recall ...
Lamborghini Huracan gets crashed in the Targa New Zealand Rally
Lamborghini Huracan gets crashed in the Targa New Zealand RallyA brand new Lamborghini Huracan has been crashed recently in the Targa New Zealand Rally. If you though that it is almost ...
Dacia Sandero RS with Renault badges looks good
Dacia Sandero RS with Renault badges looks goodA Dacia Sandero RS with Renault badges fitted to its body has been recently rendered and we have to admit that it looks way ...
Porsche Panamera Exclusive Series Edition goes official
Porsche Panamera Exclusive Series Edition goes officialPorsche has officially pulled the wraps off the Panamera Exclusive Series Edition which will be making its public debut at the ...
US: AAA says rear-view cameras can save lives
US: AAA says rear-view cameras can save livesWith winter approaching fast and the hours of light diminishing, pedestrian safety is among the concerns covered by recent AAA ...
Ford celebrates 25 years of Explorer with “#ExploreMore” social media campaign
Ford celebrates 25 years of Explorer with “#ExploreMore” social media campaignThe second-largest US automaker has another milestone to celebrate this year, following the half a century birthday of the ...
Customized McLaren P1 in China will make purists angry
Customized McLaren P1 in China will make purists angryA customized example of the McLaren P1 has been recently spotted out in China and its weird paintjob will be making purists ...
Mazda6 Coupe planned
Mazda6 Coupe plannedThe Japanese based automaker Mazda is currently planning the development of a new body style based on the Mazda6, the Mazda6 ...
FCA shares on the rise after Ferrari, capital movement news
FCA shares on the rise after Ferrari, capital movement newsThe stock of Fiat Chrysler Automobiles traded at a six-month high after shares jumped more than 18% following the recent ...
[VIDEO] Ferrari 458 Speciale vs. McLaren 650S vs. Porsche 911 GT3
[VIDEO] Ferrari 458 Speciale vs. McLaren 650S vs. Porsche 911 GT3A new video comparison is putting together three of the hottest supercars of the moment, the Ferrari 485 Speciale, the McLaren ...
Troller T4 Off-Road and T4 Rescue concepts unveiled in Sao Paulo
Troller T4 Off-Road and T4 Rescue concepts unveiled in Sao PauloTroller has officially presented to the public the T4 Off-Road and the T4 Rescue concepts during the 2014 Sao Paulo Motor Show, ...
Hyundai is planning its first hybrid model
Hyundai is planning its first hybrid modelSouth Korea's largest automaker is ready to expand its eco-friendly vehicle line-up, with Hyundai revealing it’s in the process ...
Recall roundup: Chrysler, Dodge and Jeep SUVs for two separate recalls
Recall roundup: Chrysler, Dodge and Jeep SUVs for two separate recallsThe Chrysler Group has recently issued two separate recalls for certain SUVs and pickup trucks which have been affected by two ...
This is the final Aston Martin One-77 produced
This is the final Aston Martin One-77 producedA small photo shoot is putting some light on the last Aston Martin One-77 which has been produced. The Aston Martin One-77 was ...
Read more automotive news


2013 Frankfurt Motor Show Live Images

2015 Skoda Octavia RS Combi Diesel tuning mcchip-dkr 1
dacia sandero rs 1
Porsche Panamera Exclusive Series 1
mclaren p1 weird paintjob china romania flag 1
Troller-1
aston martin one-77 last produced 1
bmw i3 sr auto group wheels 1
2015 ford focus st uk 1
Hyundai HB20 R-Spec 1
Scion tC Release Series 90 1
Peugeot 208 Natural and 208 Urb Concepts 1
2015 nissan gt-r nismo 1

More automotive from inautonews
The aftermarket specialists from mcchip-dkr have recently created an upgrade program for the diesel version of the new Skoda Octavia Combi RS. The Skoda Octavia Combi RS Diesel can indeed become one hot ride and this is happening these days thanks to the German based tuning company called ...
read more
Inautonews Editors Section
Test Drive: Dacia Sandero Stepway 1.5 90 HP
Test Drive: Dacia Sandero Stepway 1.5 90 HPIf you live in Europe, you don’t need an introduction to Dacia anymore – this is the affordable Renault subsidiary that rocked the auto industry ...
Test Drive: Mercedes-Benz A180 CDI AT
Test Drive: Mercedes-Benz A180 CDI AT The new generation of the A-Class has been around since 2012 and its overall design is quite drastic, considering its predecessor. Now, two years ...
Test Drive: Citroen C-Elysee 1.6 HDi Exclusive
Test Drive: Citroen C-Elysee 1.6 HDi Exclusive Citroen has introduced the second generation of the C-Elysee last year. The model is smaller than the C4 and it is based on the Peugeot 301, being ...

Editors Section
Inautonews Editors Section
2012 Safest Cars list 2011 Safest Cars [Video] 2011 IIHS Safest Cars [Video] 2011 EuroNCAP Safest Cars 2010 Safest Cars [Video]

Latest in Safety Recall roundup: More than 200,000 Ford vehiclesFord has announced a recall which is covering more than 200,000 units because of a possible rusty ... US: AAA says rear-view cameras can save livesWith winter approaching fast and the hours of light diminishing, pedestrian safety is among the ...
Safety Section