Automotive News - May 5, 2008 - (Page 56)

56 • MAY 5, 2008 European suppliers are expanding in Russia to serve their growing automakers. New-car sales in Russia are expected to top 3 million this year. These assemblers work at a Renault plant in Moscow. Suppliers join carmakers’ charge into Russia Companies gear up for anticipated production surge Bettina Mayer and Lawrence J. Speer bmayer@craincom.de Russia: On the grow Valeo CEO Thierry Morin: “Before year end we will have several plants in Russia.” ing parts at one factory this year and at another in 2009. � France’s Plastic Omnium will have a Russian plant this year. � France’s Faurecia plans to open two plants in Russia by 2010. Faurecia, France’s largest parts supplier, is choosing a site for a greenfield development near the western city of Kaluga. The factory would supply Renault’s Logan manufacturing site near Moscow, as well as planned PSA and VolkswagenSkoda sites. Faurecia also plans to build a second factory near St. Petersburg, to supply automakers including Ford Motor, Nissan, General Motors and Toyota. New-car sales are forecast to top 3 million this year. If current growth continues, Russia is set to be Europe’s largest market by 2012. Quick change Unit sales of non-Russian brands have soared in the past 5 years. 2,000 Units in thousands - Non-Russian Automotive suppliers are joining carmakers in a rush to set up factories in Russia. European suppliers are leading the charge, but North American suppliers are looking to Russia for growth, too. Consider Federal-Mogul Corp. In March, Federal-Mogul and Kamaz, a leading maker of heavy-duty trucks in Naberezhnye Chelny, Tatarstan, set up a 50-50 joint venture to produce pistons, piston rings and cylinder liners for Kamaz’s engines. Federal-Mogul will manage the plant, which will employ more than 300 people in Naberezhnye Chelny by year end. Part of the plant’s output will be exported. Federal-Mogul set up its first piston and ring operation in Togliatti, Russia, in 2006. It now has three operations there. Valeo and Leoni are the latest European parts makers to unveil plans to start production in the country, which is forecast to top 3 million new-car sales this year. Population 142 million Cars on road 27 million Production 2007 1.2 million Production 2010 2 million* New-car sales 2007 2.4 million New-car sales 2012 4.6 million* * Estimate Source: Roland Berger, Ernst & Young 1,500 1,000 500 Russian 0 '03 '04 '05 '06 '07 tious growth plans of the world’s major carmakers. For GM, for example, Russia is the “top-priority growth market in the world,” said Heidi McCormack, director of new business development for GM in Russia. At the Adam Smith Automotive Forum in March, McCormack was one of the automaker executives urging suppliers to come to Russia. “You need to be in this market, and there are not enough main suppliers in this market yet,” she said. Russian bulls With a population of 142 million and 27 million cars on the road, there are only 188 cars for every 1,000 people in Russia. That compares with 565 cars in Germany and 369 cars in Poland. Consultants Roland Berger project as many as 432 cars per 1,000 Russians by 2020. They say that in the next couple of years, an additional 15 million households will be able to afford a car. The growth potential has been recognized by foreign and domestic automakers. Last year an estimated 1.2 million cars were produced in Russia. That total is expected to rise to more than 2 million in the next couple of years as new plants come on line. By 2015, consultants Ernst & Young say, the number of cars on Russia’s roads will jump to more than 50 million. Annual new-car sales are expected to grow to 4.6 million by 2012 from 2.4 million last year. With Western carmakers only now beginning to build cars in Russia, most suppliers think it is not too late to enter the market. “I think we are entering Russia at a very appropriate and important time,” said Valeo’s Morin, “because there was nothing earlier.” c James B. Treece contributed to this report Source: JATO Dynamics Focused on No. 1 Top-selling non-Russian light vehicles in Russia in 2007 Ford Focus Renault Logan Chevrolet Lanos Hyundai Accent Mitsubishi Lancer Source: JATO Dynamics Love those Ladas Top-selling Russian light vehicles in Russia in 2007 Lada 2105/2107 Lada Samara Lada 110/Priora Lada Kalina Chevrolet Niva Source: JATO Dynamics 97,060 67,844 57,902 53,616 52,157 188,130 187,643 180,353 78,550 47,748 Call for help The suppliers are responding to automakers’ calls for help as Western car companies prepare to produce vehicles in Russia. Senior automaker executives, speaking at an automotive conference in Moscow in March, said they needed Western suppliers to come to Russia as quickly as possible. Suppliers are responding. “Before year end we will have several plants in Russia,” said Valeo CEO Thierry Morin. Morin said he expects Russia to be the premier car manufacturing country in Europe by 2015. “So we’ve got to start getting ready now,” he said. Valeo already is supplying Avtoframos in Russia, which made 80,000 cars in 2007. Valeo expects more business after Renault acquires a 25 per- Europe’s largest If the growth continues, Russia is set to be Europe’s largest market by 2012. “Nearly everyone I talk to is in the process of establishing activities in Russia or investigating the possibility of doing so,” Lars Holmqvist, CEO of Brussels’ European Association of Automotive Suppliers, told Automotive News Europe. Among them: � France’s Valeo SA will have several plants in Russia by year end. � Germany’s Leoni AG will start mak- cent stake in AvtoVAZ in March. Said Morin: “AvtoVAZ is roughly 800,000. So all together, it’s not all that far from 1 million. And I think they could potentially double those capacities within three years.” Valeo’s strategy runs parallel to plans announced by Faurecia last month: Open two factories in Russia by 2010. “Russia is one of our most important target markets,” said Bruno Montmerle, Faurecia’s executive vice president for group strategy. Plastic Omnium will open a plant in Russia this year to supply fuel systems for the Renault Logan. Germany’s Robert Bosch GmbH, the world’s largest automotive supplier, has long been established in Russia. But it, too, is increasing its presence there. Bosch will invest 150 million euros, or $234 million at current exchange rates, in a big new headquarters office near Moscow. Leoni learns Russian Leoni is close to starting production at two new plants in Russia. “One will definitely start this year, and the other may start this year,” said Uwe Lamann, board member responsible for Leoni’s wiring systems division. The plants likely will be near Togliatti, though Lamann didn’t confirm the location. He said one factory will assemble cars and the other commercial vehicles. The moves by Western suppliers reflect the absence of a domestic Russian supplier industry and the ambi-

Table of Contents Feed for the Digital Edition of Automotive News - May 5, 2008

Automotive News - May 5, 2008 Dodge dealers battle to bust Ram logjam Used-car price slump slams luxury makes INDUSTRY IN DISTRESS Tesla opens first dealership in L.A. Los Angeles Top auto execs to talk marketing at seminar Nader and the Corvair: GM edition tells whole story Dealers take Tundra to the people UAW official expects American Axle buyouts Ford plans more UAW buyouts at 2 plants Honda to some dealers: Upgrade or else Hyundai: Powertrains will take us halfway to mpg target Diesel dynamo Daimler cuts Chrysler value, again Ford domestic dealer count dips below 4,000 Seems like old times: More cash on the hood Toyota sister car poses a challenge for Subaru Suzuki to offer standard navigation in $16,000 car Mpg plan fuels states-rights battle Kerkorian interest buoys Ford stock Henderson: GM will keep tight rein on inventory Is it real, or is it just temporary? Ford Motor must stay focused on recovery 'Have you lost your mind?' Dealers are victims of Axle strike Federal oversight? Good heavens, no Geoff Polites: A salute Save a board seat for the UAW A car for everyone or cut, cut, cut, cut? Think of Buick as part of B-P-G Costs up in China, but bargains still abound Mexico sales fall 17% in March Obituary Hyundai reworks Sonata sooner rather than later Nissan's Dominique gets to the big dance Dana seeks new business with Japanese companies ZF will supply Nissan Certified Tool closes a plant German engineering company plans Ala. factory Dealers A Lexus colossus Used-vehicle leasing boosts showroom traffic Certified buyers opt for extended service contracts Repossessed vehicles offer dealers a profit opening Prepaid plans spark service visits beyond oil changes Key to managing floorplan costs: Be realistic Long-term loans: Convenience or bad deal? Dealers hunt upside-down buyers with leases, incentives and long-term loans Where have all the investors gone? Dealer rebounds from contract mess Dealers must choose: Reynolds, GM — or start over AutoTrader.com makes big pitch to bump up new-vehicle sales CAW, Ford reach extensive early labor deal Infiniti asks: Do you smell something? Sure, Nissan GT-R is impractical — but what a rush Faurecia: We'll break even in N.A. Suppliers join carmakers' charge into Russia Chrysler small cars, Jeep crossovers are hot A dreary April in Detroit Penske earnings rise in 1st quarter Lithia posts $1.9 million loss GM makes 2nd ethanol deal Group 1's earnings slip Magna profits down; sales rise AIADA picks dealer of the year Vox(wagen) populi — plus a sales pitch Wagoner's pension shift: More earlier, less overall COMMENT: Bargaining barbs will sting for a long time Bugging the boss: Who's listening to Porsche CEO? New models from the post office Critics have kind words for Pontiac's G8 Ford can't picture kids at design studio

Automotive News - May 5, 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.