Business opportunities for the international OESs in Russian automotive
Swiss Center Samara took part in a business meeting with ARNPO, the purchasing organization of Renault-Nissan AvtoVAZ in Togliatti. The Russian automaker is actively looking for European suppliers.
December 1,2017 – Togliatti, Russia
The Russian car market is growing fast: +9.6% in 2017, 647’000 vehicles and expected to keep growing between 6% and 10% next years.
The Joint Venture AvtoVAZ Renault-Nissan is the biggest car producer in Russia with a volume of 420’900 vehicles in 2017 (+3.8% y-o-y). In 2015, the company set up the ARNPO, a unique organization responsible for the purchases and cooperation with the suppliers in Russia.
During the business meeting, which gathered a dozen of representatives from foreign companies, the head of the ARNPO Venkatram Mamillapalle explained why AvtoVAZ is eager to increase cooperation with international suppliers.
The automotive industry has been the first field of experiment for import substitution policy in Russia. Since the early 2000’s, foreign automakers were strongly incentivized to realize part of their manufacturing activities on Russian soil.
Though several producers of auto components followed automakers in Russia, many car manufacturers are still struggling to find reliable local suppliers to work with. In order to attract foreign producers of auto components, AvtoVAZ has been working with the regional government to set up an industrial park, with turnkey workshops and manufacturing premises, which can be combined to other measures of government support.
The Public Joint Stock Company AvtoVAZ is the largest light automobile manufacturer and seller in Russia, with a production capacity close to a million cars per year. The company is jointly owned by the Alliance Rostec Auto B.V, a partnership between Renault-Nissan-Mitsubishi group and the Russian state corporation Rostec.
The company designs, manufactures, markets and services a line of LADA cars, LCVs, sport cars, as well as special utility vehicles under the brand “BRONTO”. It also manufactures Chevrolet-Niva model, a product of a joint venture with General Motor. Two of Renault models (Logan, Sandero), one of Nissan model (Almera) and two of Datsun (on-Do, mi-Do) are assembled in the plant of Togliatti.
Study to come
Considering the trend of localization in Russia, the challenges that automakers are faced with in this market and the growing need of modernization and higher production standards, we believe that there are many opportunities to be seized by Swiss and European companies in this industry. A study dedicated to this topic and detailing the key players, volumes and production activities will be released for subscribers of the Swiss Center Samara in the first quarter of 2018.