Foreign Investment into Russian Automotive Industry

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DOI: 10.20542/0131-2227-2016-60-6-61-69

Yu. Baronina, Primakov Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO), 23, Profsoyuznaya Str., Moscow, 117997, Russian Federation (ubaronina@mail.ru

Acknowledgements. The article has been supported by a grant of the Russian Science Foundation (project 14-28-00097 “The optimization of Russian foreign investment ties in the context of deteriorating relations with the EU”).


Abstract. This article analyzes the scope and localization of foreign investments into foreign Russia automotive industry. Since 2000s many transnational automotive companies has implemented their assemble-cars-projects in Russia. Large population, low level of motorization and reduction of taxes on auto components became significant factors for attracting investors into the industry. As a result, by 2015 the share of locally-made foreign models increased to 52%.By the end of 2015, there were 16 plants producing cars of foreign brands. Depending on the volume of investment and the method of project`s implementation, all enterprises can be divided into several groups: assembly without significant FDI, joint ventures with national companies and FDI to construction of full cycle factories. Among these groups there are enterprises established on the basis of old automobile centers, at the facilities of non-core plants, and newly-built factories. Also, the article analyzes development of the automotive industry in a difficult economic and political situation in 2014-2015. Falling consumer demand for products led to a significant reduction in companies’ revenue, and many of them had to stop the assembly operations. At the same time, Chinese companies entered into several agreements to build a plant in Russia. During the period from January to November 2015, the Russian market of new vehicles reduced by 34.5% as compared to the same period in 2014. The Russian government decided to resume the state recycling program in September 2014 to contain the continuing fall in demand. Later, in April 2015 a state program of preferential car loan was entered to further car market support. 

Keywords: automotive industry, foreign investment, joint venture, Russia 


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For citation:
Baronina Y. Foreign Investment into Russian Automotive Industry. World Eonomy and International Relations, 2016, vol. 60, No 6, pp. 61-69. https://doi.org/10.20542/0131-2227-2016-60-6-61-69



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