RUSSIA REPORT
March 10, 2022–The volume of working auto production facilities in Russia has dropped by 45% since the invasion of Ukraine. On March 3, work continued in Russia on 55% of the facilities for assembling LCVs and passenger cars, comparing to 2021. Last year, domestic operations produced 83% of sales in Russia.
Work continues at AutoVAZ (in Tolyatti and Izhevsk), Stellantis and Mitsubishi alliance (PSMA Rus plant), Autotor (Kia and Hyundai assembly), Nissan, Haval, GAZ, UAZ, Mazda Sollers and Isuzu. The total number of vehicles produced by these enterprises has reached 766,000, which is 55% of the sales produced by the Russian automotive industry last year. The total annual production capacity of Russian automotive industry is about 2.7 million vehicles.
After implementation of Western sanctions and the volatility of currency exchange, automakers started raising prices and stopped production and shipping cars. Companies such as Volkswagen, BMW, Renault, Mercedes, Hyundai, Toyota, Sollers Ford have announced the temporary closing of factories. Closed import to Russia Audi, Porshe, GM, Jaguar Land Rover, Lexus, Volvo, Honda, Mazda and others.
Some market players expect full suspension of automotive production because of sanctions, problems with logistics and the shortage of components. The length of idle time depends on external factors and on industry ability to adapt to new situation.
PSR Analysis: The main production problem in Russia today is based on logistics issues. These issues can halt car production for some time. However, some Russian plants, like UAZ, can switch back to older models, which can be built with domestic components only. At the same time, Chinese companies will quickly fill the gap. South Korea says it is going to continue to supply cars to Russia. Toyota and Lexus announced they will not leave the Russian market and Subaru said it will continue to export to Russia. PSR
Maxim Sakov is Market Consultant – Russia Operations for Power Systems Research
