08.04.2024Maxim Sokolov: "Investments, competencies and jobs in the Russian automotive industry need protectio
Mr. Maxim Sokolov, the President of JSC "AVTOVAZ", held a meeting of the Expert Council under the Committee on Industry and Trade of the State Duma of the Russian Federation, dedicated to the development of the automotive and component industries, as also to the threats hindering their further growth and achievement of the technological sovereignty. The Council is composed of the key experts in the automotive and component industries.In his report Maxim Sokolov addressed the most challenging issues, particularly the expansion of imported cars from China, the range of measures proposed to protect the domestic market, along with the initiatives on the ELV fee indexation amount to encourage foreign companies' investments in the automotive manufacture localization inside our country."In Russia foreign automotive OEMs are pursuing the large-scale price expansion program, - Maxim Sokolov stated. – Speaking of China, last year the PC sales there exceeded 26 million units, affording an opportunity for their brands, due to the scale effect, to give the long-term and almost uncapped discounts in foreign markets, including the Russian one. Let me give as an example one Chinese off-roader being popular in Russia, just recently its discount amounted to 900 thousand rubles, that is three times higher than the average ELV fee. In other words, as of today the protective barriers in the domestic market are not sufficient for encouraging the foreign automakers to switch from importing finished cars into the Russian Federation to investing in the development of industrial manufacture inside our country."Since mid-2023, the Chinese brands have been cumulatively holding over a half of the PC market in Russia in quantitative terms, having reached a record 60% in December last year. "In monetary terms, the situation is even more dramatic, - Mr. Sokolov highlighted. - AVTOVAZ, covering more than a third of the Russian market in units, financially controls a share just slightly over 9%. It means that the remaining 90% of the funds are being simply washed out of Russia abroad, to where the added value is generated, to where foreign engineers, workers, and component suppliers are having their jobs. In the truck segment, the situation is no less concerning, it is Chinese manufacturer that has been keeping podium in quantitative and in monetary terms for several months now."The situation as it has developed, poses a real threat not only to the development of, but also to the sustainable existence of the domestic automotive industry and component industry in the medium term. To date, the industrial cooperation with AVTOVAZ alone employs more than half a million people in the central regions of the country. In the absence of efficient mechanisms encouraging the foreign automakers' investments in the local manufacture development, money will continue being washed out of the Russian economy.According to experts, if current trends continue staying in force, the domestic automotive OEMs will be bound to cut production down to 50% due to the forced switch to the one-shift operation mode (instead of two-shift), caused by a dropping demand in their price segments, where, through the large-scale discounts, imported Chinese cars are going to have presence. Under these circumstances, the Russian companies will have to make just low-tech outdated products only, being unable to finance their R&D and capacity development, so as unable to create new high-tech jobs. All of these will adversely affect the achievement of technological sovereignty and industrial growth.Following the meeting of the Expert Council, the attendees supported the proposals aimed at protecting the Russian automotive and component industries. In particular, the initiative has been put forward to consistently increase the ELV fee, which should facilitate the foreign companies' investments in the local manufacture setup and development. As part of the Council panel discussion, the expert community proposed setting the step-by-step progressive scale of the ELV fees for the passenger cars, commercial vehicles and trucks, agricultural, construction and road engineering vehicles, buses, and electric vehicles. In the short run, the detailed proposals by the Expert Council will be submitted to the Committee on Industry and Trade of the State Duma and to the relevant executive branch."The initiatives of our Expert Council to strengthen the measures to protect the local market are based on the state approach. The national automotive and auto component industries are ready to face up the fair market competition. But for this, all players shall compete within the single legal and market field. We stand for there to be more number of localized automotive productions in Russia, both under national and foreign brands. And let them bring a wide choice of models to the market and compete with each other for the domestic buyers' attention. Thanks to increased market protection, imports of finished cars shall be replaced by investments in their manufacture inside the country. Local manufacture in Russia will be growing up, there will be more orders for the component industry, new technologies and jobs will appear, the cost of components will decrease, prices for new cars will go down, and thus the market will grow. Each of us, being a citizen of Russia, is evidently interested in the situation evolving this way," - AVTOVAZ President Maxim Sokolov emphasized.
