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Russian Automobile Market Shows Rapid Growth
May 28, 2007

Russian automobile market has shown an upward movement over the past few years, thereby attracting foreign automotive manufacturers to its landscape.

Magna international (MGA), one of the largest automotive spare part producers in the world has recently undergone exciting weeks. On May 10, 2007, the Canadian company announced its partnership with the leading Russian tycoon Oleg Deripaska. Oleg Deripaska is investing $1.54 billion in the company. This partnership led to the conjecture that magna might be able to hitch the US carmaker Chrysler (DCX) as per the news published on
Business Week.

Magna Chairman Frank Stronach said “Our partnership will accelerate Magna's growth in Russia and surrounding countries, markets that we see as holding significant opportunities for us," in news published on
Business Week. He forecasted that the company would be able to successfully set up 300 plants in Russia in the coming 10 years. Further, he disclosed before the Canadian media that Magna would try its best to increase its revenues by two to three times. With its expansion in Russia and Eastern Europe, Magna recorded a revenue of $24 billion in the fiscal year 2006.

Russia is among the speedily developing automobile markets in the world. It is one of the preferred countries for foreign investment in the various auto motive sectors. It is expected that the production of foreign automobiles in the threshold of Russia will increase by three times till the 2010.  The demand for foreign cars is increasing in Russia for reasons like the growing population of the middle class, increase in the disposable income of the consumers, improvement in giving out car loan policies to the people who need it and improving auto motive dealership.

The sales of foreign cars increased by 63% in the year 2006 and it was in the same year that the Russian market showed increasing trends. This increment was supported by the sales of automobiles, an increase in the industry investment, leading automobiles dealers promising to provide the consumers with better manufacturing facilities, increasing number of people shifting towards buying foreign brand cars, and other developments.

As per a research analyst at
RNCOS, “With increasing people moving towards buying cars manufactured by foreign carmakers, the liability of an international company like Magna increases to a large extent. There are very few international automobile spare part manufacturers who have ventured in the Russian automobile market. Most of them are engaged in getting firm hold on the automobile markets of countries like Poland and hungry (and other central and east European countries). Before the recent boost in automobile sales in Russia, the Russian automotive market was not considered large enough to attract the global car manufacturing countries”.

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