Car exports from Russia jump thanks to logistics subsidies

Car exports from Russia jump thanks to logistics subsidies
Photo: Knowitall63

Russia is increasing the supplies of locally produced vehicles and automotive components abroad due to massive state support. This year, finished vehicles exports have surged by almost a third. The countries of the Commonwealth of Independent States remain the biggest buyers of Russian cars.

Record-breaking logistics subsidies are boosting Russian automotive exports, reports Automotive Logistics citing data from the Russian Federal Customs Service. In the first nine months of 2019, the volume of Russia’s finished vehicle exports increased by almost 28% to 73,400 units worth $1 billion compared to the corresponding period of 2018. This year, the country’s government has allocated a record amount of 4,5 billion rubles ($80 million) to support exports through logistics subsidies, standardisation of Russian products to meet the technical requirements of export countries and their promotion among foreign customers.

Besides exporting finished vehicles, Russia is also seeing foreign demand for automotive components due to integration of the Russian automotive industry into the global supply chain, reports the Russian Export Centre. “We have OEMs coming from Germany and asking to find Russian [tier one] suppliers for them, as the price-quality ratio of Russian companies is the best they can find,” said the centre’s director Andrey Slepnev to Russian Prime Minister Dmitry Medvedev in November.

Volkswagen Group Rus assembly plant in Kaluga. Photo: Boevaya mashina

The Commonwealth of Independent States remains the biggest sales market for Russian-origin vehicles. Half of the vehicles exported from Russia in the first nine months of 2019 were supplied to Belarus (27%) and Kazakhstan (23%). Turkey and the Czech Republic accounted for 7% and 6,3% of exports respectively, reads the Russian Export Centre’s data.

According to the Russian Ministry of Industry and Trade, the country’s main car exporters are AvtoVAZ, VW, Renault and Hyundai. The companies plan to further increase their supplies abroad. In 2018, AvtoVAZ exported 38,000 finished vehicles, which was 57% more than in the previous year. The company has set a target to boost exports to 100,000 finished vehicles per year. VW plans to export 24,000 vehicles from Russia in 2019. The manufacturer intends to invest 60 billion rubles ($950 million) into its Russian division by 2028, said Managing Director of Volkswagen Group Rus Lars Himmer.

Automotive components exports are also meant to continue growing. In 2024, the Kaluga region is expected to export components worth $250 million annually. Volkswagen Group Rus, Mitsubishi Motors and PSA Peugeot Citroën are among those producers who established export supplies from the region. VW has recently begun exporting engines produced by its Kaluga plant and hopes to expand export to 34,000 units per year within the coming decade.

By Anna Litvina