Automotive News Europe - June 2019 - 13

AUTOMOTIVE NEWS EUROPE

Q&A

Electric Drive
Autonomous Driving

the material all the way through. We own the cars all
the way through. We do the quality control and the logistics. It's all our equipment, our standards, everything.
We have been fortunate over the last two years that we
could run a solid two-shift operation in both factories
[Kaluga and Nizhny Novgorod]. With good utilization you
achieve a huge cost advantage.

Laboratory Testing

Shared Services

Will you add a third shift?
We have to be cautious. We are at 100 percent utilization on two shifts. You will fill only 20 percent to
30 percent of the capacity at the beginning and then
you have the inefficiencies again because you will
never fully fill the third shift. Therefore, you would
rather do a few Saturdays [of production] and remain
at two shifts than go to a third shift.

Connectivity

How volatile is the ruble?
The exchange rate jumps between 70, 75, 80, back
to 75 [rubles to the euro] within weeks. It makes our
internal finance people crazy. But you have to manage. Two things you can't expect in Russia are stability and predictability. You have to stay flexible and
make fast decisions.
Who are your biggest competitors in the market?
It is Toyota for Volkswagen and it's Kia and Hyundai
for Skoda. For Audi, it's the classic rivals, MercedesBenz and BMW.
How does Mercedes' decision to add production
in Russia affect Audi?
We will wait and see what they do and how it affects
their pricing. Localization results in better pricing but
with the numbers they are talking about it is unlikely
they will have lots of local components. What we know
is that if you don't start localization of lots of components, you are very exposed to currency fluctuations.
How do you feel about Opel re-entering Russia?
It's their business so you should ask them, but what
is definitely true is that the price levels in Russia are
not very high and the competition is intense. It's not
easy. They also closed a network of dealers and now
they are going to reopen it again. Talk to the government. Talk to the dealers. Everybody. You have to
convince everybody that this time you will stay for
good. And it is not so easy to make everybody believe. You also need a critical mass in Russia.
How have Kia and Hyundai been able to become
serious competitors in Russia?
During the crisis when we were holding back to balance profitability with volume and pricing, they kept
the prices low and went for market share and volume
full speed. I don't know how that affected their profitability. That's their secret, but they really used the
crisis to gain market share. Also, what you cannot underestimate is they are still producing a lot of models
in Kaliningrad [using contract manufacturer Avtotor],
giving them not only the Solaris and the core models
out of St. Petersburg, but many other models for a
ANE
very good price in Russia.

JUNE 2019

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Automotive News Europe - June 2019

Table of Contents for the Digital Edition of Automotive News Europe - June 2019