WASHINGTON/KAZAN (CI Ukraine) — Fiat Chrysler’s chief executive Sergio Marchionne expressed significant concern over the Russian automotive market when asked about the expected impact of Crimea-related economic sanctions.
[Fiat Chrysler Chief Executive Sergio Marchionne speaking to Capitol Intelligence using CI Glass at Brookings Institution in Washington, DC]
Speaking to Capitol Intelligence Group at Brookings Institution in Washington, DC, Marchionne said that automakers “must be patient” regarding developments on the Russian auto market. The typically forthright Marchionne was unusually reserved when asked about the negative consequences the Ukraine crisis will have on the Russian market.
The Russian automotive market was originally forecasted to overtake Germany as Europe’s largest market until the Crimean crisis forced the Russian government to downwardly revise its 2014 GDP forecasts to zero growth from the relatively modest previous forecast of 2.5 pct GDP growth.
A source at Germany’s Daimler AG, which owns a 15% stake in Tatarstan-based Kamaz truck group, said Kamaz’ year-to-year sales to June were down by 20%.
The source said Daimler expects an improvement in the second half of the year but that the downward trend was very worrisome for Kamaz and the Russian market in general. The source said the Crimea situation and the expected deep recession in Russia for the next year and half has Daimler reconsidering new investment into the country.
However, more telling has been an almost universal lack of commentary by US and European automotive makers and parts manufacturers operating in Russia.
Marchionne’s “one has to be patient” response is representative of very cautious stance of the foreign auto manufacturers working in Russia such as Renault-Nissan with Togliatiigrad based-Autovaz, Ford Motors Company which has operations in St. Petersburg and Kazan and General Motors.
Even specialized research firms such a Nomura Research Institute said they have no concrete data measuring the impact of the Russian automotive market.
Poland’s auto parts industry exports roughly a fifth of its output to Russia, but is yet to see any impact of the significant deterioration of political and trade ties between the two countries, an official at the Polish export-finance bank said. The industry operates on longer-term contracts than producers in the food or furniture industries, which have suffered sales declines, the banker said.
Several Polish auto parts makers declined to comment for this story. An executive at one large auto parts producer said the company has been “working overtime” to make sure its links with Russian producers are not affected by the political situation.
However, NRI general manager Akira Iwata said that the decline in automotive sales is mixed, with high-end producers such as Toyota and Mitsubishi seeing increased year-to-year sales while the slow-down is drastically impacting the lower-to-middle segment of the market.
By PK Semler in Washington, DC and Kazan, Russia and Aleksander Nowacki in Warsaw. For more information please call +1-202-549-3399 or email firstname.lastname@example.org
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