Russian Government has drawn up a new strategy for the automotive industry up to 2035

Russian Government has drawn up a new strategy for the automotive industry up to 2035


 

Vedomosti.- The Ministry of Industry and Trade has prepared a draft government regulation approving a new strategy for the development of the automotive industry up to 2035.

A new industrial strategy that takes into account today’s realities has been ordered by President Vladimir Putin to be developed by September 1 after a June meeting with auto industry officials at the International Economic Forum in St Petersburg. However, industry participants have previously noted that a new plan is needed for the development of the automotive industry. Thus, the Association of Russian Automobile Dealers already stated in mid-March that the current strategy for the development of the automobile industry up to 2025, which was adopted back in 2018, has lost its relevance.

The main goals of the new strategy are to meet the needs of the Russian market for cars by at least 80% and to ensure technological sovereignty of the domestic car industry, the document of the Ministry of Industry and Trade reveals.

The main goals of the new strategy are to stimulate production and demand through state support, to create production of new components, mainly in the field of power units and active and passive safety systems. By 2035, 500-600 billion rubles will be needed for this, and the same amount to support exports, the document says. For comparison, the total amount of state support to the automotive industry over the past five years amounted to 387 billion rubles. Basically, these were funds for programs for discounted car loans and leasing, subsidies for manufacturers for the development of gasoline and electric vehicles, and for the purchase of various types of equipment at the expense of the budget.

The production priorities of the strategy include organizing the production of small diesel engines, automatic transmissions, anti-lock braking systems and airbags. Given the competitiveness of Russian technologies, they should be an absolute priority for automakers, the strategy’s authors emphasize.

In order for Russian components to appear and become competitive in comparison with foreign counterparts, it will be necessary to invest a total of 2.7 billion rubles in 2023-2035. in research and development, as well as in the organization of production of car components, follows from the document. The main investment burden will fall on companies, but government support will also be provided through various financial and regulatory measures.

According to the authors of the strategy, between 2016 and 2021, companies in the Russian automotive industry invested an average of 0.2-0.5% of their turnover in research and development per year. The task now is to increase this figure to 3-4% of annual sales. “Support for research and development in the automotive industry and the production of car components was carried out within the framework of industry-wide instruments, not exceeding 1.5-2 billion rubles per year. Taking into account the insufficient level of R&D spending, this strategy envisages a significant increase in its funding,” the document reads.

With the planned volume of investments in the production of auto components for 2022 in the amount of 24 billion rubles by the middle of the implementation period of the strategy (2028-2029), this figure should already be 148-151 billion rubles per year 2035 – 190 billion. Investments in Research and development for car components to increase from 10 billion rubles in 2022 to 82 billion rubles in 2035 Implementation of R&D “will involve high costs” and longer development times.

A representative of the Ministry of Industry and Trade said that 481 billion rubles were invested in industry in 2015-2021, about 10-15% of them in research and development.

The strategy outlines the need to regulate the admission of foreign companies to the Russian market. Since the mid-2000s, the attraction of foreign automakers subject to the independent development of component suppliers has led to the creation of a majority of competing auto assembly plants in the country, the document said. This has reduced the attractiveness of the market for investment by component, subcomponent and material manufacturers due to fragmentation and low emissions for most platforms.

According to the authors of the strategy, the total production capacity in Russia in 2021 amounted to 2.95 million vehicles. The loading rate for the assembly of passenger cars and light commercial vehicles is 60%. This is broadly in line with the market: According to the Association of European Businesses, sales of new passenger cars and light commercial vehicles amounted to 1.67 million vehicles (+4.3%) in 2021.

The forecasts for 2022 and 2023 in the strategy look extremely cautious. It is expected that by 2022 only 800,000 vehicles of all types will be sold in Russia, of which 600,000 will be passenger cars and 40% of total sales will come from imports. Gradually, the share of imports will decrease while production will increase. The authors of the document expect the market to surpass 2021 figures only in 2026-2027, when sales of 1.75-1 .76 million cars can be reached cars in Russia.

The industry also expects a slow increase in production and consumption figures for the future: 2.1 million vehicles are to be produced in 2035, of which 1.9 million will be sold on the domestic market.

Automakers have an understanding of the configuration of the future components industry and their priorities, a GAZ Group representative told Vedomosti. According to him, already in 2020 the company has worked out its own localization projects for critical component groups, the key of which is a light diesel engine for commercial vehicles.

“We have drawn up business plans, a list of projects has been submitted to the Ministry of Industry and Trade. GAZ is ready to organize its production at its facilities,” said the representative of the concern. He considers it necessary to start the sectoral component program as soon as possible and it is important that it is not only included in the strategy but also that budgetary resources are made available for its support over the next three years.

Avtovaz plans to apply to the Ministry of Industry and Trade to amend its Special Investment Agreement after adopting an updated strategy for the development of the automotive industry, company president Maxim Sokolov told Vedomosti in July. According to him, the SPIC was closed under the previous shareholder Renault and under the current conditions it is partially irrelevant. Sokolov also said that Avtovaz’s strategy will also be included in the overall strategy of the industry.