Emphasis on luxury: the assembly of a domestic premium SUV has begun

Victor Ilyin

After the funny "secret" of the Russian auto industry was revealed, the prospects for domestic import substitution in this area look even more vague. Recall that officials proudly announced that Russian Moskvich 3 cars had already begun to roll off the assembly line. In fact, they turned out to be Chinese JAC JS4 crossovers, which are assembled and then partially (!) Disassembled at a Chinese factory, packed, brought to Russia, assembled in large units again and under the Moskvich brand go on sale. And this process is loudly called “import substitution news”. Although Moskvich-3 does not contain a single bolt made in Russia.

Another news from this series concerns the Aurus Kommendant premium SUV, priced from ₽33.7 million, which is being mastered by the domestic auto industry. Its mass production has been launched in Yelabuga. This is the second serial model of the domestic brand. The first was the Aurus Senate sedan. Although talking about mass production is a stretch. For 10 months of 2022, according to Avtostat, only 21 cars were registered in Russia. Demand for Rolls-Royse turned out to be more than 4 times greater.

On this occasion, analysts of the channel Kremlyovsky mumkoved write:

“Two cars a month is not mass production yet, and the new SUV will not fundamentally change the situation. Aurus representatives claim that next year the volume of production will double, that is, we can talk about a production plan of less than 50 cars for Russia for the whole of 2023. Even Rolls-Royce produced 5586 exclusive and even more expensive cars in 2021. Such low production figures negatively affect the cost and profitability of production. Especially considering that the announced degree of localization of the new model is 70%. That is, the machine consists of extremely expensive components produced in single copies. But LLC "Aurus" apparently has no financial problems, despite the lack of market success. 63.5% of the company is owned by the state-owned NAMI, which was engaged in development, 36% is owned by the UAE Tawazun Defense, Security and Development Fund, which acted as an investor, and 0.5% - by Sollers, which assembles cars at the site in Alabuga.

According to the results of the first half of 2022, Sollers by Vadim Shvetsov received a net loss of ₽1.1 billion due to the departure of Ford, the shutdown of Mazda production and problems with the supply of components for UAZ. But by the end of the year, management hopes to make a profit. And the production of Aurus cars is the only stable indicator of the company. Even the sale of UAZ vehicles, following the results of 10 months of 2022, sank by 24%. Shvetsov need not worry about the payback of the project: ₽6.6 billion for the organization of mass production was provided by Arab investors.

NAMI also does not experience a shortage of funds: the state-owned enterprise received ₽12.4 billion from the budget for the development of cars, and another ₽2 billion for the industrialization of the project. Funds were allocated for the idea of creating a Unified Modular Platform that other automakers can use in whole or in part. But premium cars with a power plant with a capacity of 598 hp. - the phenomenon is not massive, so all investments fell exclusively on Aurus models. There were enough funds: in 2021, NAMI received a net profit of ₽20.7 million.

Thus, funds have been invested in the production of cars and their components, assembled by hand in an extremely small circulation, but at the same time, AvtoVAZ will start 2023 with the production of obsolete Granta and Niva models without security systems.