Transformation of European Automobile TNCs’ Strategies on the Russian Market

104
DOI: 10.20542/0131-2227-2020-64-5-93-100
Yu. Baronina (ubaronina@mail.ru),
Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO), 23, Profsoyuznaya Str., 117997, Moscow, Russian Federation

Acknowledgements. The paper was prepared in IMEMO RAS within the grant from the President of the Russian Federation for state support of young Russian scientists (project no. MK-6258.208.6) “Restructuring of economic ties between Russia and the European Union: factors and prospects”.


Abstract. Just a few years after the global crisis, the purchasing power of people and the demand for cars decreased significantly again due to the general negative economic and political situation, the slowdown in the national economy and the weakening ruble. Despite this, foreign investors keep interest in the Russian market and continue to develop existing investment projects and invest in new ones. Since the products of foreign automakers account for 3/5 of all cars sold in Russia, the analysis of strategies transformation is especially relevant. The determining factors stimulating changes in the strategies of European car companies in Russia are the dynamics of market demand and government measures to regulate the industry. On the one hand, it stimulates companies to change strategies by themselves, on the other hand, it helps to adapt to the complicated business conditions. In the context of the recession in the Russian market, companies began to look for opportunities to export made in Russia products to other countries. First of all, this option is typical for companies that build their plants in Russia and produce cars with a fairly high level of localization, constantly increasing it, including through the production of engines (Renault and Volkswagen). At the same time, the state is also interested in increasing the volume of deliveries in the future; customs regulation may be mitigated. Increased exports will allow to load production capacities and avoid downtime of plants. Due to the new requirements for localization of production, other companies have to transform their strategies with respect to the Russian market even more radically: switch from importing products and contract assembly to building their own plants. This type of change in strategy is typical for BMW and Daimler, which produce high-class products. Moreover, under conditions of economic instability, the demand for these cars was characterized by a relatively greater degree of stability compared to economy-class cars.

Keywords: automotive industry, Russian automotive market, strategies of automotive companies, passenger cars, European automakers


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For citation:
Baronina Y. Transformation of European Automobile TNCs’ Strategies on the Russian Market. World Eñonomy and International Relations, 2020, vol. 64, no. 5, pp. 93-100. https://doi.org/10.20542/0131-2227-2020-64-5-93-100



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