Domestic automakers need to create localized manufacturing capacities in developing nations

6 november 2018 | Rossiyskaya Gazeta

"It's fairly difficult to significantly expand exports of Russian cars to the other CIS countries," Nikita Elizarov, Adviser of the Department for Sectors of Economy of the Analytical Center, told a Rossiyskaya Gazeta correspondent. "This has to do both with constraints on demand and with the development, e.g. in Kazakhstan and Uzbekistan, of localized automotive production."

Nikita Elizarov
Nikita Elizarov
Department for Sectors of Economy

He went on to add that exporting cars to the automotive superpowers (such as the USA, Germany and Japan) is completely out of the question despite the competitive price advantage.

According to the expert, China, the USA and Germany are no longer trying to expand their net exports, preferring instead to set up local assembly lines in other countries. This has to do with the fact that most countries want to develop their own industry basing on the international corporate groups. Thus, GM has manufacturing facilities in Egypt, Columbia, Vietnam, Brazil, India, Hungary, Ecuador, Mexico. Ford Motor Company has localized production lines in Thailand, Argentina, Brazil, South Africa, Turkey, Romania, Mexico, Slovakia.

"Protective measures introduced by many developing countries that want to support localized production organized by international automakers won't allow Russian automotive companies to increase direct exports there," Nikita Elizarov believes.

According to the expert, the Russian automakers (AVTOVAZ, GAZ Group, KAMAZ) also need to set up localized manufacturing facilities in developing nations that have good potential in the local automotive markets such as Morocco, Egypt, Mexico, Argentina, India, Eastern European countries etc.

Source: Rossiyskaya Gazeta

Photo: from open sources