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.
Hyundai plans to reduce annual production by 15% at its St Petersburg plant, according to plant director A. Kossack. As he notes, production volume at the plant has dropped significantly this year: in H1 2020, the plant produced only 73,000 cars, 25% of its production capacity.
Taking into consideration September’s output of 24,000 cars, total production volume through the end of the year should reach about 200,000 vehicles, almost 15% below the 2019 results. The plant has just returned to a three-shift working schedule. During the post-quarantine period, the plant working on a two-shift basis, making 700 cars per day.
PSR Analysis: It appears that the most pessimistic forecasts for the passenger car market to drop 40-50% are not going to be realized. Despite this outlook, Hyundai remains positive about the Russian market, and plans to start engine production here in 2021. PSR
Maxim Sakov is Market Consultant, Russia, for Power Systems Research
The world’s leading mining trucks OEM – Belaz – has won the opportunity to supply 96 mining trucks to India, taking the prize from US and Japanese manufacturers.
Maxim Sakov
They are heavy 220-ton mining trucks. The supply will take two years. Twelve trucks will be shipped to India this year, and the rest will be sent in 2021. The total contract value exceeds US$ 300 million. Belaz also is completing a previous large contract with India for 77 trucks.
PSR Analysis: Historically, Belarussian Belaz has supplied most of its trucks to Russian mines. However, this year it has suffered a dramatic decrease in demand from Russia. So, the OEM has had to shift its focus to other markets. Its product range includes dump trucks from 30 to 450 ton capacity, wheel loaders and dozers. OEM uses YAMZ, Cummins, MTU, Scania and Liebherr engines for its machines. PSR
Maxim Sakov is a Market Consultant in Russia, for Power Systems Research
Zetta company has had to shift mass production of its Russian car “City Modul 1” until after 2020 because the Fund of Industry Development refused to provide credit of 99.9 million Rubles (about € 1.1 million).
Maxim Sakov
According to the Fund opinion, the company has insufficient budget to start the production, even with the requested credit. “The company needs an investor, who will believe in market potential of the product, and will co-finance the project together with the fund. The fund is ready to consider application one more time as soon as such investor will be found,” the Fund said
“City Modul 1” would become first serial Russian electric car. Zetta plans to make the car on its own production site in Tolyatti; production capacity is 15,000 units per year.
Move is opposed by Russian KAMAZ which plans to make similar machines.
Maxim Sakov
Market players have proposed canceling import taxes and utilization fees for commercial vehicles fueled by LNG until 2025. The target of the measure is the development of LNG-transport until the appearance of domestic analogs of such machinery.
The suggestion comes from foreign makers of LNG on-highway tractors and supported by Gazprom. Now, no imported vehicles are exempted from these taxes.
The import tax for on-highway tractors is 5% of their cost, and the utilization fee is 10 to 12K Euro. LNG tractor is more expensive than its diesel analog by about 35K Euro.
Currently construction at the plan includes rebuilding of warehouses and administrative buildings in preparation for installation of new crane equipment.
Maxim Sakov
“Amkodor-Onego” LLC was established by Belarus holding “Amkodor” in 2019 following the bankruptcy if the “Onego Tractor Plant”. The plant needed an investor, and “Amkodor” stepped up. “Amkodor” is going to create a site for assembly, and then – for import substituting full cycle production of forestry machines – harvesters, forwarders, etc.
An investment contract was signed in June 2019. Under the contract, full modernization of the warehouses and major overhaul of the buildings are planned. Total cost of the project is estimated by US$ 220 million. The government of Karelia (Russian region) assumed the priority of the project and established several requirements.
The launch of new plant with full production capabilities for BMW SUVs is planned for July 2021. According to Kaliningrad officials, the new plant is one of the most important investment projects in the regional processing industry. Autotor holding makes up a significant part of the regional production.
Officials said the enterprise is one of the largest employers and taxpayers in Kaliningrad region. Construction of the plant building is underway, and machinery installation will be started in January 2021. The first car is expected to be produced in July 2021.
Russian production of the clean on-road Mercedes-Benz Actros will start in November at the KAMAZ Naberezhnye Chelny plant. The new truck is being modified by Mercedes to meet Euro-6 standards. At the same time, German engineers are reworking the process of exhaust gases neutralization.
Russian production of Actros will allow Russian fleet-owners to purchase top-quality trucks without extra customs fees. The price and initial availability have not been disclosed. Read The Article
The Russian government subsidies now will cover 60% of individuals’ and small business’ expenses for switching vehicles from gasoline to NG fuel. That’s up from 30%.
Maxim Sakov
The minister of Power Industry has offered to increase subsidies for switching vehicles belonging to individuals and small business two times – from 30% to 60%. Another 30% will be paid by Gazprom at the expenses of its marketing program. Therefore, vehicle owners should pay only 10% of the cost to switch.
The government will assign US$ 0.7 billion (50 billion Rubles) for development of the NG fuel industry during the period 2020-2024. This includes an annual assignment of 3.5 billion rubles for gas fuel stations and 0.7 billion rubles for fleet modification.
There are 484 gas stations in Russia (May 2020), 329 of them belong to Gazprom. In 2019, the fuel sales on gas stations increased 30%. Read The Article
New restrictions for imports of right-wheel engines to Russia became effective July 1. Completely barred from import are machines of the M2 and M3 class – trucks, buses, LCVs and construction machines.
Maxim Sakov
On top of this, the procedure of Custom’s clearance of right-wheel passenger cars became more complicated. The owner of such car should obtain technical certificate, confirming compliance of car design to the safety requirement.
According to the Federal Customs Service, the amount of payments will depend on ecological class, production date, engine volume and other parameters. This will include processing fee, custom’s tax and utilization fee. Read The Article
Hyundai VIA has begun construction on an auto engine plant near St. Petersburg.
Maxim Sakov
The enterprise initially plans to make 240,000 engines per year. Then, the capacity will increase, and the plant will make 300,000 Gamma I engines of 1.6 liters.
The project has been established under a special investment contract. The investors “injected” US$185 million (13.1 billion Rubles) into the project. The plant will bring about 500 jobs to the city.
Test launch of the plant is planned in Q1 2021, and mass production is scheduled to start in October 2021. Read The Article
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