Crisis with Turkey may hit Russian automotive

Crisis with Turkey may hit Russian automotive

Vedomosti – Avtovaz-Renault-Nissan alliance has almost completed the organisation of the component supplies from Turkey, as told by sources close to the alliance to Vedomosti newspaper on Tuesday. One of the sources has stated that a number of applications have been made to a series of organisations such as the Federal Customs Service and the Ministry of Industry and Commerce. However, the problems faced by Russian companies on component imports from Turkey still remain unsolved. Two sources state that the aforementioned components are being held at the customs for the last two days. According to one of the sources, Valeo -manufacturing clutch systems in Russia- and fuel tank manufacturer DSK are among these companies. A source close to DSK confirms the situation. Valeo representative refused to answer the questions asked by the newspaper. Two sources have added that difficulties have been experienced in automotive equipment supplies and the necessary applications have been made for the purpose of overcoming the problems.

Nissan is in touch with all relevant government units, as told by a company representative. “We have covered a great distance in solving the problem. It’s very unlikely that the circumstances will have an effect on production.” Renault representative denies any disturbances in the flow of products procured from Turkey, for the time being. Avtovaz representative has not made any comments.

The newspaper also quotes from the presentation made by the representative of Automotive Industry Exporters Union OIB in Russian Federation: Evren Belenlioglu at Avtoevolyutsiya Conference. According to Russian Federation Customs Service data, $700 million worth of auto-components have been imported from Turkey to Russia in 2014.

Auto-components are excluded from the list of prohibited products, announced on Tuesday. As learned by Vedomosti, however, no relevant warning has yet been made to the customs officers. According to a legal expert specialised in customs, small and medium size companies face serious difficulties at customs. The situation is especially grave in Novorossiysk, St. Petersburg and the Central Region. As told by the expert, most of the receivers opt for the re-export regime and some others reject the goods from Turkey. Not only compensation is out of question, but also the storage costs of the products are demanded. The companies pay €200 control fee per container and the daily storage cost is between 15,000 – 150,000 rubles.

A source has told Vedomosti that unless a quick solution is found to the problems with the suppliers, Avtovaz, for instance, may have to stop production on Friday. The source also draws attention to the risk of extension to the list of products, the imports of which will be prohibited from Turkey. The same source highlighted the current discussions amongst officials, concerning the prohibition of automobile imports from Turkey. The vice president of Association of European Businesses has written a letter to Igor Shuvalov, asking for the cancellation of plans to ban auto-component imports from Turkey. Shuvalov’s representative has stated that the letter has been received and currently being worked on.

Sources speaking to Vedomosti hope that no such ban is implemented on component imports from Turkey, considering the difficulties to be faced by factories in finding substitutes to these products in the short run. According to Vladimir Bespalov from VTB Kapital, component prices may rise in the country, due to the situation.

Factories procuring products from Turkey, such as: Volkswagen, KAMAZ and GAZ Group, did not answer Vedomosti’s questions. (GAZ Group also assembles Gazel Next in Turkey). Toyota representative has told that no difficulty is experienced in supplies. Officials from the ministry of industry and commerce did not answer the questions of the newspaper either.