{"id":520,"date":"2024-06-07T11:02:30","date_gmt":"2024-06-07T11:02:30","guid":{"rendered":"https:\/\/www.eurasia.sk\/?p=520"},"modified":"2024-06-12T16:18:23","modified_gmt":"2024-06-12T16:18:23","slug":"from-crisis-to-adaptation-i-automotive-industries","status":"publish","type":"post","link":"https:\/\/www.eurasia.sk\/en\/from-crisis-to-adaptation-i-automotive-industries\/","title":{"rendered":"From Crisis to Adaptation (I. – automotive industries)"},"content":{"rendered":"\n

Despite statements by several Russian politicians that sanctions imposed on Russia by Western countries largely stimulate the development of the national economy, restrictive measures have led to serious problems for many sectors. In the article, you will learn how a year and a half after the introduction of new sanctions, Russian businesses are seeking a way out of the crisis.<\/p>\n\n\n\n

From Crisis to Adaptation<\/p>\n\n\n\n

According to a survey of employees conducted by the Institute of National Economic Forecasts of the Russian Academy of Sciences in April to May 2022, sanctions affected nearly 60% of the surveyed companies. According to employees in the surveyed entities, sanctions particularly led to difficulties<\/a> in obtaining imported raw materials and components (67.40% of responses); to price increases within the country (62.00%); to an increase in general economic uncertainty (44.20%); to higher import prices (40.30%), and to a decrease in effective demand in Russia (38.80%).<\/p>\n\n\n\n

Companies responded to the challenges by seeking alternatives to departing suppliers within Russia (69.70% of responses), reducing investment costs (36.90%), exploring new markets (31%), and introducing new products (21.30%).<\/p>\n\n\n\n

The same team of authors conducted a survey<\/a> a year later – in spring 2023, which indicates that companies have generally adapted to the new reality: 31.5% of surveyed companies believed that they were not affected by anti-Russian sanctions, compared to 19.2% in April to May of the previous year.<\/p>\n\n\n\n

Furthermore, it is worth noting that the percentage of respondents who stated that they only experience negative consequences of sanctions decreased from 56.9% at the end of 2022 to 46.5% in spring 2023, while the proportion of those who believe that sanctions had a positive impact increased from 16.2% to 18.9%.<\/p>\n\n\n\n

“In spring 2023, Russian companies increasingly preferred active adaptation methods – searching for new suppliers and markets, modernizing production, etc., while reducing the scope of using passive adaptation methods based on reducing various types of costs,” summarizes one author from the study of survey results.<\/p>\n\n\n\n

According to information from an analytical report prepared for the Central Bank of Russia in 2023, manufacturers of industrial products for export remain sensitive<\/a> to sanctions. The problem lies not so much in the formal and informal restrictions imposed on Russian exports, but in the consequences of reduced imports due to sanctions in conditions of higher import dependence of exporters.<\/p>\n\n\n\n

However, the level of sensitivity varies depending on the industry, so after reviewing the general situation of the Russian industry, you can proceed to analyze the situation in specific areas.<\/p>\n\n\n\n

Automotive Industry<\/strong><\/p>\n\n\n\n

The Russian automotive industry and car enthusiasts were among the first to feel the effects of economic sanctions.<\/p>\n\n\n\n

Recall that foreign companies such as Mercedes-Benz, Ford, Nissan, Toyota, Renault, Mazda, and many others left the Russian market – partly out of solidarity with Ukraine, and partly due to logistical difficulties with component deliveries. This affected factories that assembled these cars in Russia. At the same time, it became almost impossible to import European cars directly from the Old World: as part of the eleventh package of sanctions, it was prohibited to export any cars with an engine capacity greater than 1.9 liters to Russia.<\/p>\n\n\n\n

All this led to a triple decrease<\/a> in car production in 2022 compared to the same period in 2021.<\/p>\n\n\n\n

In 2023, the situation began to improve slightly: new cars began to be assembled in factories abandoned by foreign companies. For example, production of Moskvich cars began at the former Renault plant in the capital, and at the Elabuga plant, where Ford Transit was previously produced, licensed assembly of Sollers brand vans began, as well as in the Lipetsk region.<\/p>\n\n\n\n

In addition, contacts were established with new foreign partners: in 2023, the import of passenger cars to Russia almost tripled<\/a> compared to the previous year – in the first 10 months of 2023, 889,400 cars were imported. China is the main supplier of new cars to Russia in 2023 – 80% of them. Cars are also imported through Kazakhstan, Kyrgyzstan, and to a lesser extent through Armenia and the UAE.<\/p>\n\n\n\n

The most popular brands of newly imported cars are Chery (23%), Changan (10%), Omoda (9%), Geely (8%), and Exeed (7%). Omoda and Exeed are sub-brands of Chery, which means that this automaker as a whole represents almost 40% of imports.<\/p>\n\n\n\n

The changed foreign policy situation affected not only the countries from which cars were purchased but also their age: Russians began to massively switch to imported used cars – in the first 10 months of 2023, 4.84 million used passenger cars were sold in Russia, which is 23% more than in the previous reporting period. The most popular brands are Toyota with a share of 27.4%. This is followed by Honda (16%), Kia (7%), BMW (6.5%), Nissan (6.3%), and Hyundai (5%).<\/p>\n\n\n\n

However, servicing used cars is not so easy – there is still a shortage of spare parts for many cars, especially premium and rare brands, which, according to experts, will last<\/a> at least until the end of the year. In July 2023, problems with deliveries of several items were reported<\/a> – electronic components, body parts, interior parts, engines, and transmissions for Hyundai, Audi, BMW, Jaguar, Lexus, and Cadillac – had to wait six months.<\/p>\n\n\n\n

The shortage of spare parts leads to their price increase. According to car experts, in the summer of 2023, there was a significant increase in prices for:<\/p>\n\n\n\n

– body parts for foreign cars;<\/p>\n\n\n\n

– engine control units;<\/p>\n\n\n\n

– spark plugs;<\/p>\n\n\n\n

– control units for Volkswagen power units;<\/p>\n\n\n\n

– Brake pads and discs (especially for Japanese cars);<\/p>\n\n\n\n

– air flow sensors.<\/p>\n\n\n\n

Conclusions<\/strong><\/p>\n\n\n\n

The Russian automotive industry has faced significant challenges due to economic sanctions and the withdrawal of foreign automakers from the market. Despite initial setbacks, there are signs of adaptation and resilience within the industry.<\/p>\n\n\n\n