Russian Market Review Issue 01, April 2013

Government initiatives

Automotive market development

The Russian Government supports the development of the automotive industry and considers a number of measures to stimulate the demand for vehicles and industry growth in full compliance with the country’s international obligations. This includes subsidizing private loans for car purchasing, lowering import taxes on automotive components, stimulating the upgrade of the car fleet through taxes and insurance rates, etc.  In 2012 Russia produced over 2 mln and sold 2,9 mln cars with foreign brands accounting for around two thirds of production and 75% of sales.

Source: Government of Russia, AEB

Infrastructure initiatives

The Ministry of Economic Development proposed to invest the country’s oil proceeds into a number of infrastructure projects to support economic growth. According to the Ministry, infrastructural debottlenecking requires investments equal to 1,8% of GDP while the  contribution to the national GDP growth from these projects will be around 4 p.p..

Source: Government of Russia

Steel using sectors

Railways reconstruction

The Russia Railways, a state-owned company, is planning to invest over $18 bln in the infrastructure development of the Siberia and the Far East including the reconstruction of the Trans-Siberian and Baikal-Amur railways in 2013-2017 – the Russia’s largest rail routes stretching from the western to the eastern part of the country. About 45% of the planned investments are provided by the state. The reconstruction will increase the capacity of the transportation routes by 25 mty from the current level.

Source: Vedomosti, RBC

Automotive capacity growth

Avtotor,  Russia’s largest foreign brand cars producer, developed a large-scale project to develop an automotive cluster in Kaliningrad region, the Russian exclave on the Baltic Sea bordering Poland and Lithuania, by 2020. The project valued $4 bln of investments will become a home for 21 production facilities with capacities of over 250 thousand cars/year. Foreign car producers including BMW, General Motors, Kia and Hyundai are to join the project.

Source: Metalinfo

The German automotive components producer Continental has started the construction of a plant in Kaluga region (Central Russia). The plant is to be commissioned next year. The investments total 20 mln Euro.

Source: Metalinfo

Raw Materials

Expansion of the port facilities

As a part of a state development program the authorities of the Russian Primorsky region (Far East) plan to build a 20 mty large coal terminal close to Vladivostok. The project valued at $600 mln will be started in 2014 with facilities to be commissioned in 2015.  

Source: Metalinfo

May 08, 2013