The Russian Auto Industry: Key Features, the Effect of Coronacrisis, Prospects

Abstract

 Based on in-depth interviews with representatives of Russian auto makers, statistical data, analytical reports and official documents, the paper reviews some key features and trends of the industry prior to the crisis, principal effects of the COVID-19 crisis, and evaluates future prospects of car manufacturing in Russia. The authors demonstrate that the sector utterly depends on massive direct investments from giant international auto makers, proactive state policy as well as major players’ commitment to the domestic market. In the meantime, both domestic and international manufacturers are subject to pressure from the state, which, however, has radically different goals. The international manufacturers are encouraged to localize production and bring to Russia new stages of production cycle. The domestic manufacturers are compelled to safeguard jobs and observe other social obligations. It is shown that the crisis has not brought about significant adverse effects and has not created new problems for the sector, although it augmented some of the earlier contradictions. During the pandemic, the sectoral measures of anti-crisis support played an important role, as did close ties to the state bodies that allowed restoring operation of supply chains and dealers’ networks. Of great importance for the future development of the sector is the dynamics of the domestic market closely connected to the general economic situation, the state policy regarding the localization of production and regulation of various players’ access to measures of state support, as well as development of Russian manufacturers of auto parts. As for principal restrictions for the industry development, it is the vague prospects of its technological future in Russia, which mostly suffers from the lack of a clearly defined government strategy in this regard.