Who and why is imitating the "revival" of the Russian automobile industry

The “Russian manufacturers” of passenger cars have reduced everything to Avtovaz, which produces in simplified versions (without airbags, ABS, ESP) the ancient Lada Granta and even more ancient Lada Niva Legend and Lada Niva Travel, “ UAZ" with its classic, but again simplified models, the little-known "Evolute" from Lipetsk and the Chinese "Haval", assembled in Tula. The latter signed an agreement with the Ministry of Industry and Trade on the localization of production and is formally considered a Russian manufacturer.

Who left and who stayed

In Russia, the assembly of 13 car brands has stopped (someone officially left our country, someone simply stopped assembling), and in the first 9 months of 2022, sales of new cars, even including imported ones, decreased by 60% compared to the same period last year year . But if you do not take all this into account and look only at the dynamics of September and October, then we can say that the situation is getting better. The attitude of the authorities to the domestic auto industry is already beginning to move from the plane of statistics to the plane of faith.

If we start from dry numbers, then there is only one brand that was able to sell more cars in 2022 than in 2021 - this is the premium Korean brand Genesis, which has an increase of as many as 27 cars. And they are all imported. On the other hand, faith in a bright future (according to Manturov, not only the future, but also the present) is fueled by statements by assembly enterprises about the imminent launch of conveyors with new models.

Recently, the owners of one of these enterprises, Sollers Auto, announced that the plant in Vladivostok, which previously assembled Mazda cars (the Japanese sold their share to Sollers for 1 euro), will resume work very soon - in the II quarter of 2023 . What kind of cars it will be is not yet specified. A little earlier, Sollers promised to launch the production of two models of commercial vehicles (a van and a light truck) under its own brand at a plant in Yelabuga, where the popular Ford Transit was previously made. Kaliningrad Avtotor, where Hyundai, Kia and BMW used to be assembled, is in line to receive a contract with new suppliers of car kits: the assembly of traditional cars of new brands is expected to start in the first quarter of 2023, and it is also planned to start assembling electric vehicles from batteries from Rosatom. At the same time, the construction of a plant for the production of electric motors and control electronics is nearing completion (it is not known where they will be used). And of course, the people are waiting for Moskvich to be released there in Moscow. Will Russia soon be flooded with new locally produced cars at affordable prices?

China - period

Assembly enterprises do not disclose the names of future partners. But experts say there are no options other than Chinese companies. Even Iran shows no interest in the half-dead Russian market and plans only to import deliveries of one model. Everyone is afraid of sanctions - explains the vice-president of the National Automobile Union Anton Shaparin .

- There is no hope for the arrival of other foreign manufacturers, because even the Chinese carry out deliveries in such a way as not to “shine” and not fall under possible secondary sanctions.

In September 2022, according to the traffic police, 9,753 new Chinese cars were registered in the Russian Federation, which is 22% of all registered new cars. And they have almost no competitors, because Lada, which occupies 39.4% of the market, is much more primitive and cheaper. The most popular "Lada Granta" has only one airbag and 4 speakers, and the most popular "Chinese" in September is the "Chery Tiggo 7 Pro", a crossover with rich equipment, automatic transmission and other achievements of modern civilization at a price of 2.6 million excluding discounts.

The European, Korean and Japanese analogues remaining in warehouses are much more expensive. And everything else is the remnants of former luxury (warehouse stocks, which, according to the forecasts of car dealers, will be enough for 2-4 months) and a frail flow of imitation of parallel imports, which we do not have.

Unreliable partners

The chances that our entrepreneurs will persuade Chinese partners to assemble locally instead of directly importing are minimal: the China Automobile Manufacturers Association has already sent a letter to local concerns urging them to "intensify the extraction of maximum profit through online sales, without the margin of dealers and distributors." The Chinese want to interact directly with the buyer, they do not need intermediaries, including SKD. But if a miracle suddenly happens, and the Chinese start a local assembly, ignoring these recommendations, then, most likely, as it has happened more than once before, everything will be limited to a “screwdriver” assembly, when wheels and a few other minor elements are installed on an actually finished car. This has already happened with the "domestic" electric vehicles "Evolute", which in fact are purebred Chinese "Dongfeng", only formally assembled at the Lipetsk plant "Motorinvest".

Putting on wheels and putting up your badges is what auto-assembly plants can expect. Experts are sure that one can not dream of a high degree of localization. Ilya Grashchenkov, President of the Regional Policy Development Center Foundation, believes that the main barrier here is the limited market.

- The question is in demand. All these "screwdriver" builds were based on the projected number of purchases and loan programs. The Chinese auto industry will face an outflow of those who want to buy new cars, as the purchasing power of Russians has decreased (no job, no money, and if there is, they prefer to save them). Plus, the attitude towards the Chinese auto industry is not the best - they do not have that status. Chinese cars are bought out of desperation. All this reduces the capacity of the market.

And the general director of Gazprombank Autoleasing, Lilia Markova, notes that it is simply impossible to create a full-fledged production in such a short time.

- It is impossible to establish production in a short time. For example, at the Moskvich plant, at the first stage, JAC electric vehicles will be assembled according to the principle of badge engineering - with Moskvich emblems on the steering wheel and radiator grille. It is too early to talk about the release of your own model - development takes 2-3 years. The first batches are needed to debug assembly lines, there is no need to talk about serious production volumes at this stage.

Most of the announced auto production projects, according to Anton Shaparin, are either a pure formality for the opportunity to get under the state program to subsidize domestic cars (the state pays 20% of the cost of a car for most residents of Russia and 25% for residents of the Far East), or completely empty PR -stock.

- Full production is impossible. As it happens, for example, at the Evolute plant, where the whole assembly of cars consists in the fact that they creatively stick nameplates there. That's all. Therefore, all projects like Moskvich (certified November 16, Moskvich 3 is the Chinese JAC JS 4 - ed.) exist exclusively in the PR space, they do not exist anywhere else.

So there is no understanding of the prospects for the Far East project of Sollers. The assembly of cars in Yelabuga (in any form) is also questionable. It is assumed that JAC vans and trucks can be assembled in Tatarstan, but, firstly, JAC is already starting to import them - directly from China, and secondly, these vehicles are already being assembled in Belarus under the MAZ brand. Having three different supply chains and three brands for a not-so-popular car is a dubious development strategy.

We should not forget the already existing experience of working with Chinese partners and stuffed cones. Against the backdrop of the bottomless Chinese market (25.65 million cars were sold there in 2021), Chinese companies are not seriously considering Russia. They are easy to come and just as easy to go. SUVs "Great Wall" were assembled in turn by the company "Irito" in Gzhel near Moscow, "Stavropol-Avto", "Motorinvest" in the Lipetsk region, until its own plant was built in the Tula region. Derways collected Chery, Lifan, Brilliance, Hawtai and, again, Great Wall in Karachay-Cherkessia. The same "Motorinvest" still took up the assembly of "Changan". Tagaz tried to produce several Chery models under its own brand. And where are they all now? Only fans and enthusiasts of the Chinese automobile industry remember them - sometimes production lasted less than a year, then suppliers of car kits from China reconsidered their views on their presence in Russia and refused to cooperate. The same fate may befall the current projects.

Blind faith without regard to the facts is sometimes useful for maintaining cheerfulness and optimism, but we must not forget about reality. True, so far all calls “not to lie”, sounding not only from Margarita Simonyan with deputies, but also from Vladimir Putin, have been lost somewhere.