Russian light vehicle production forecast for Q1 2011.
Ivan Bonchev is responsible for research and M&A advisory services and leads Ernst & Young's Automotive Segment in Russia and the CIS. Here he outlines his forecasts for 2011.
Significant growth in demand for light vehicles since Q2 2010 allowed car manufacturers to increase production volumes: the number of cars produced in 2010 was double the 2009 figures.
In the case of favourable macroeconomic conditions, passenger car production volumes will continue to grow rapidly in the current year. The growth ratio is expected to reach approximately 50-65% in Q1 2011 compared to Q1 2010, while production is forecast to total about 285-320,000 units. This is in line with vehicle production seasonality in Russia.
Among the key drivers of the production growth will be government support initiatives (the car scrapping programme and the programme for subsidising interest rates) and the plans of major car manufacturers to ramp-up production and increase their localisation level in Russia.
In January 2011, Hyundai started full-scale manufacturing of its new budget-priced sedan Solaris designed especially for the Russian market. This may significantly influence overall passenger car production in Q1 2011.
In addition, the Avtoframos plant will start to operate at full capacity of 160,000 cars this year (2010 production volumes amounted to 87,000 units).
PSA/Peugeot-Citroen and the Mitsubishi plant in Kaluga will also ramp-up Russian passenger car production in Q1 2011 compared to Q1 2010, as it was opened only in April 2010.
Furthermore, Nissan announced that it had extended its Russian production line with the Murano model in January 2011.
Discontinuation of the Audi SKD assembly should not influence overall production volumes as free capacities of the VW Kaluga plant will be filled with VW and Skoda models.
The stoppage of Volga Siber production in October 2010 may incur some slow-down effect, however it should not be considerable due to the low production volumes of this model. Moreover, the GAZ Group has already signed a contractual assembly agreement with Daimler in December 2010 to assemble 25,000 Mercedes Sprinters in 2011 and has also announced that it is to sign a cooperation agreement in February with GM and VW on light vehicles assembly in its production facility.