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Russia To Emerge As Major Automobile Market
Jun 13, 2007

Automobile industry in Russia is all set to grow and reach production level of one million units by the end of this decade.

Huge automobile market of Russia can achieve enormous growth owing to the fact that income of middle class is increasing in earlier communist country, as per Canadian Scotiabank in its worldwide auto report. “Russia is already one of the top 10 global auto markets, with 2006 car sales of 1.5 million units, surpassing Spain to become Europe's fifth-largest car market,” the bank said Thursday (May 31, 2007) in news published on
BBJ.

The Russian Industry Minister informed that vehicle assembly capacity of Russia, from the present 1.7 million units production capacity would rise to three million units by the turn of decade because of foreign investors planning to invest $1.8 billion in innovative assembly facilities, in news published on
BBJ.

After gaining entry to WTO, Russia has opened up its market for foreign retailers and consumers. Russians are now showing more interest in global standards as they are growing richer. Russia has become a fast growing market in world following China due to projected growth in yearly sales of a million automobiles in next decade.

GM, Ford, Renault and KIA have already set up manufacturing sites in Russia. DaimlerChrysler, Toyota, and Volkswagen are intensifying their assembly in Russia. The increasing demand for foreign vehicle will provide fuel for other foreign automobile manufacturers to establish their assembly in Russia. Regulated safety and environmental standards will make local OEMs to endow in further contemporary equipment. Resultantly, Russia's new automobile market will develop into further demanding for technology, drawing automobile suppliers to Russia as well.

A research analyst at
RNCOS commented, “Two precursors are necessary to sustain the current growth trend in the Russian automobile market. Firstly, automobile business needs to have feasible plan and targeted management. Secondly, Russia must stabilize its economic and legal framework so as to take benefit of the country's low labor costs and the size of its economy. No doubt, Russia has the future to become a major automotive base for the export of vehicles and components to the rest of the world”.

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