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Power Systems Research Activities in Russia Paused
March 2022- Power Systems Research has currently paused all research and business development activities in Russia. We have maintained a presence in Russia since 2013 to bring important updates to our clients about the powered equipment markets within Russia. We are monitoring the current situation on a daily basis and hope to again establish this presence at some point in the future when the conflict with Ukraine resolves. Please contact us at info@powersys.com if you have questions regarding business conditions in Russia. Thank you.
The North-American premiere of the UAZ Patriot SUV took place recently at the Los Angeles international Autosalon. The exclusive importer of the vehicle is Bremach Inc., a California company. The Russian car has its own name, Bremach 4×4. The name Taos, announced earlier, was rejected to avoid the conflict with Volkswagen, which has had a product with this name since 2020.
The Patriot was introduced in two versions–standard and off-road extreme. Both models are equipped with 2.7 gasoline engine ZMZ Pro of 149 hp and a six-gear automatic transmission Punch Powerglide 6L50, connected all-wheel drive. Standard version costs US$ 26,405 in USA.
According to Bremach, in the first 24 hours after the introduction, they received deposits totaling US$ 3.8 million. How many cars were ordered, was not disclosed, but the minimum deposit is US$ 100.
The prices for cars in Russia now exceed the prices abroad. The high prices are caused by high custom taxes, certification for Glonass satellite systems and exchange rates of national currency. After many global OEMs built assembly plants in Russia, prices for cars were equal to cars in other markets, and after fall of the Ruble exchange rate in 2014, cars became even cheaper. However, in 2021 prices have grown significantly because of a shortage of semiconductors.
For example, the minimum price of a Hyundai Sonata in the USA is US$ 24,150, equivalent to about 1,725,000 rubles. In Russia, a similar car is priced at 1,799,000 rubles. A Kia Seltos in the USA costs US$ 22,490 (about 1,605,000 Rubles); in Russia, the minimum price is 1,734,000 rubles. Cars such as the Toyota Camry, Toyota Corolla and RAV4 are also more expensive in Russia by about US$ 3,000-5000.
PSR Analysis: Actual prices are even higher in Russia because of dealer mark-ups. Sometimes, to buy a car, it’s necessary to pay 1.5-2 times the prices as a cost for “options”. As a result, there has been a 20% fall of sales in the country. PSR
Maxim Sakov is Market Consultant – Russia Operations for Power Systems Research
This report comes from General Director of GAZ Power Aggregate division Konstantin Rukhani. “After 18 months we shall complete the tests, after about 2.5 years, we’ll come to mass conveyor production,” he told Ruhani. He added that the design of the new hydrogen engine will be similar to its gas reciprocating engine.
“We consider that at the moment, if we come to the strategy of use gas piston engine working on hydrogen, we can get vehicle with a price of 30-34% higher than current ones. The engine will be less demanding for the purity of hydrogen fuel,” he added.
The government is considering cancelling construction of the high-speed railway between Moscow and St. Petersburg.
One alternative being considered is the replacement of the high-speed railway for selected cargo between the two cities. This option is lobbied by Russian Railways.
The plans to build a high-speed railway between Moscow and St. Petersburg were announced last August. The project was included in the federal budget for 2022-2024. Completion of construction work was expected in 2027.
PSR Analysis: The most obvious reason for uncertainty of a mega-project like this, is a shortage in the budget. However, the Russian budget now is healthy and has a growing surplus. So, the Russian government may be considering a scenario where this money is required somewhere else. If this assumption is correct, it’s a crisis scenario. PSR
Maxim Sakov is Market Consultant-Russia Operations for Power Systems Research
Technical specialist of Sinara Transport Machines (STM) has started work on assembly of RTM-32 kits in India. They also will supervise trial starts of finished machines. Kit assembly works are performed under a State program “Made in India”, if there is a localization level of 51%.
Based on Russian kits, there will be made rail padding and straightening machines, which are used during railway construction, repair, and maintenance. Also, the machines are working with wooden and concrete rail ties. Assembly is based on the production plant of San Engineering & Locomotives Co. Ltd, located in Bangalore which is acting as STM partner in the project.
AutoVAZ stopped assembly of cars on all three production lines at its Tolyatti plant Nov. 12, because of parts shortages, according to the plant’s trade union representative.
The plant produces Lada Largus, Lada X-Ray, Renault Sandero, Logan, Lada Niva Legend, Lada Kalina, and Lada Granta.
AutoVAZ systematically stops its conveyors because of component shortages. To compensate, the OEM tries to implement 6 day work weeks, but these also were cancelled because of parts shortages.
AutoVAZ also stopped production for a corporate vacation July 26 – Aug. 15.
This OEM is developing a passenger car dubbed E-NEVA which will use hydrogen as a fuel.
Almaz-Antey is a group of 60 enterprises, specializing in air defense weapons. With this current effort, OEM is making civilian products based on the developments from the military industry. In August, the concern introduced a self-propelled electric chassis that could be used to create passenger cars on the basic chassis. The chassis includes two electric motors and a set of batteries of 90 kWt/hrs, providing up to 400 km on a single charge.
Sales on new passenger cars and LCVs in September 2021 declined 22.6%, according to the Association of European Businesses (AEB). In total, automotive salons and dealers have sold 119,4 000 cars, which is 34,9 vehicles less than in 2020 September.
According to AEB head Tomas Schterzel, “negative trend is going on” (in August the sales dropped 17%), although the totals for the first nine months of 2021 are showing 15.1% growth versus the same period in 2020. The shortage of vehicles on the market is connected to decreased production and the deficit of semiconductors. The energy crisis in China and UK, growing prices of raw materials and other problems will support negative trend in the market during the near term.
PSR Analysis: The problem here is not only in components deficit, but primarily in the car prices going up and the consumer’s incomes going down. So, the negative trend will develop further. PSR
Maxim Sakov is Market Consultant – Russia Operations, for Power Systems Research
KAMAZ has significantly increased production for the first nine months of 2021 versus the same period last year. Through September, the OEM produced 30,979 vehicles, up 21% from the same period in 2020, reports the company.
In September, KAMAZ made 4,067 vehicles (versus 3,676 vehicles in September 2020.
PSR Analysis:KAMAZ has found ways to resolve the problem with components (mostly by offering simpler models), working with pent-up demand and increasing its market share.
Maxim Sakov is Market Consultant – Russia Operations, for Power Systems Research
The Russian government has approved a new plan for electric transport development into 2030 that will be implemented in two stages. At the end of the first stage, the plan calls for production of at least 25,000 electric vehicles and the launching of 9,400 charging stations.
By 2030, 10% of all new vehicles should be electrical, and the number of charging stations should increase to 72,000. In Russia, by 2030 it’s planned to launch production of accumulator battery cells, and to build 1,000 hydrogen fuel stations for vehicles.
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