BMI's Executive Summary

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In 2007, Russia's car density stood at 228 per 1,000 adults, which is little more than a third of the Western European level. Rising affluence will see Russia catching up, making it the largest automotive market in the region by 2012, according to BMI's latest Russia Automotive Report. Rising income in middle-class households has led to increasing demand for better quality cars, a trend that has put Russian-owned producers at a disadvantage compared to foreign car manufacturers. Russian autos firms are, therefore, looking to form commercial deals – joint ventures and producing vehicles under licence – to modernise car production.

BMI estimates that automotive sales rose 44.6% in 2007 to 2.99mn units, including a 50.0% rise in car sales to 2.70mn units and an 11.5% rise in commercial vehicle sales to just under 295,000 units. Foreign brands are securing a larger size of the Russian market, due in part to an increase in their production activities in Russia. Foreign firms with a manufacturing presence in Russia are set to see the highest sales growth rates. In contrast, Russian producers will see more moderate sales growth. There is a sense of gloom hanging over domestic producers. In the first 10 months of 2007, AvtoVAZ's Russian sales amounted to 542,500 units, up just 2.2% y-o-y. This does not bode well for its target of 1.0-1.2mn units by 2012 and it will rely increasingly on tie-ups with foreign autos majors to reach its goals. Given current trends, the market share of Russian carmakers is expected to fall to around 25% by 2012, or just 1.36mn units. This would equate to a 50% rise in sales of Russian brands over 2007 levels, compared to a 125% increase by foreign brands.

Autos majors have been lured to Russia by a mixture of tariff reductions on imported parts and machinery and booming demand for foreign-branded cars. Foreign brands, including domestically-manufactured cars and imports, represented around two-thirds of sales in 2007, up from just 7% in 2001. The rush to invest comes ahead of Russia's entry to the WTO, which will prevent the government from offering incentives such as the waiving of tariffs.

In Q307, Russian Economic Development and Trade Ministry officials announced six new projects involving foreign car makers to assemble passenger cars in Russia, ahead of a moratorium on assembly agreements. The total investment of the projects is worth US$1.7bn and includes a joint venture between GM and GAZ to assemble low-cost cars, a new production line for Opel models and a plant for the assembly of SsangYong crossovers. BMI expects that by 2012, output should be more than double the level achieved in 2007, but this will still not be enough to satisfy domestic demand.

Contents

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Chapter 1 – SWOT Analysis

Russia Auto Industry SWOT

Russia Economic SWOT

Chapter 2 – Europe Regional Market Overview

Production

Table: European Autos Production – Historical Data & Forecasts (CBUs unless otherwise stated)

Table: European Autos Production by Group, H1 2006

Table: Central and Eastern European Car Assembly Plants, 2006 (Countries under review)

Table: The Rise in Central and Eastern European Production and Average Wages

Sales

Table: Europe Autos Sales – Historical Data & Forecasts (CBUs unless otherwise stated)

Table: EU and EFTA Autos Sales by Group, H1 2006

Table: New Vehicle Registrations by Market in Europe (EU and EFTA), 2006

Table: New Car Registrations by Market in Europe (EU and EFTA), 2005

Competitive Landscape

Table: EU-15 and EFTA, Car Registrations, 2005

Table: Top 10 Best Selling Models in Europe, Jan-May 2006

Suppliers

Table: Top Five OEM Parts Suppliers, 2005

Regulation

European Car Prices

Table: Price of Europe’s five top-selling models by market

Chapter 3 – Business Environment Rankings

Table: Central and Eastern Europe Business Environment Ranking

Economics – Long-term Risk

Politics – Long-term Risk

CBU Output Growth

Vehicle Ownership/Penetration Potential

Regulation

Competitive Environment

Chapter 4 – Industry Forecast Scenario

Production and Sales

Table: Russia Auto Industry Forecast (CBUs unless otherwise stated)

Trade

Table: Russia Autos Sector – Historical Data & Forecasts (CBUs, unless otherwise stated)

Economic Contribution

Table: Russia Auto Industry Forecast (CBUs unless otherwise stated)

Chapter 5 – Macroeconomic Forecast Scenario

Table: Growth And Output

Country Snapshot: Russia Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Chapter 6 – Special Focus: Commercial Vehicles

Regional Market Overview

Table: Regional Commercial Vehicle Market: Country ranking, sales

Table: Regional Commercial Vehicle Market: Country ranking

Table: Regional Commercial Vehicle Market: Country ranking, production

Table: Regional Commercial Vehicle Market: Company ranking of significant regional manufacturers

Table: Recent and planned investments in Central and Eastern Europe

Russia Commercial Vehicle Market Overview

Table: Structure of the Commercial Vehicle Market (CBUs mn)

Sales

Table: Size of Commercial Vehicle Market

Table: New truck imports by brand

Table: Size of Commercial Vehicle Market

Production

Table: Production in Russia

Table: Production forecasts for Russia

Chapter 7 – Competitive Landscape

Table: Foreign brand sales in Russia

Regulation

Manufacturers - Foreign Brands

Table: Current and planned investment by foreign automakers in Russia

Manufacturers – Russian Brands

Table: Passenger Car Production (CBUs)

Table: Passenger Car Production (CBUs)

Suppliers

Chapter 8 – Company Monitor

Regional Case Study: Kia

Sales

Table: Kia Sales in Europe (EU and EFTA), By Model

Production

Table: Kia Production In Europe (EU, EFTA, Romania and Turkey), By Model

Company Profiles

AvtoVAZ

KAMAZ

RusPromAvto

Kia

Renault

Taganrog Automobile Plant,(TagAZ)

BMI Forecast Modelling.90

Automobile Industry

Sources

Appendix: Regional Demographic Data

Wages (ave. labour force per annum), US$ PPP

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn .

Competitive Landscape for European Automotives: Sample of  
Companies Ranked

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Rankings and Competitive Landscapes by production and sales; market share and change on previous year; number of employees, ownership structure and year established. Also includes analysis of company expansion, export and investment strategies.

Network of Automotive Sources

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BMI's European Automotives Reports are based on an extensive network of multilateral organisations, government departments, automotive industry associations, chambers of commerce and company reports. Information sources include: