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Russia continues to increase finished vehicle imports

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Russia imported 212,400 finished vehicles from January to November of 2018, which is an increase of 15.8% compared to the same period of last year, Russian Federal Customs Service (FCS) estimated. The overall value of finished vehicles imports during that period reached $5.2 billion, FCS added.

Almost 33% of passenger cars are being imported into Russia from Japan, about 16% from Germany and just over 9% from the United States, Russian consultancy Autostat concluded, citing the data released by FCS. These figures, however, don’t include passenger cars imported by citizens and private entrepreneurs.

Finished vehicle imports into Russia slumped from 703,300 units in 2014 to 267,000 units in 2016. The market has  gradually recovered from mid-2017, resulting in the slight increase of supplies to 267,700 units last year, with imports reaching $6.7 billion, compared to $6 billion a year earlier.

Logistics support
Finished vehicle import in Russia is supported by new logistics initiatives, including the state-subsidised finished vehicle delivery from the Far East to European Russia.

Speaking at a press-conference in St. Petersburg in September 2018, Vadim Shvetsov, the owner of Russian carmaker Sollers, revealed Russian logistics company Lorus SCM sees the potential to increase finished vehicle import through Vladivostok sea port by 120,000 units. He explained that this route, among others, could be redirected from the port of St. Petersburg thanks to the special tariffs on finished vehicle transportation offered by Russian Railways.

Lorus SCM is already supplying finished vehicles produced by Mazda and Suzuki on this route, with delivery time reduced to 30 days, as compared to 78 days needed to deliver finished vehicles from assembly plants in Asia to European Russia by sea. Other carmakers could be interested in this scheme, especially if logistics companies can successfully negotiate with Russian Railway to keep tariffs at a fixed rate over the next decade.

Economic feasibility
The number of finished vehicle imports into Russia may increase further, as some OEMs are reportedly considering reducing production in the country and switching to import.  In September 2018, Hyundai Motor Manufacturing Rus reported that it could cut finished vehicle assembly at the production plants in Russia and “switch to large-scale import”.

Reportedly, this could happen if the company fails to agree on the terms of the special investment contract (SPIC) with the Russian government. Over the past few months, several OEMs have expressed concerns that the localisation requirements the Russian government plans for SPIC are very strict and require large investments.

In 2019, finished vehicle assembly in Russia will be stopped by Lifan and Chery, local news outlet Regnum reported. Both companies have contracts for finished vehicle assembly with the Derways plant, but those agreements were not extended for 2019. Lifan considered transferring production to Kazakhstan or Belarus, the company told Regnum.