Betting on Russia, despite turmoil

Posted on 10/6/2014 4:58:50 PM

It sounds risky, but many automotive industry executives said that to the best response to Russia's Western sanctions is to continue to invest.

Russia light vehicle sales in the first eight months of this year, this year's 12 percent, consulting firm Roland Berger forecast.

Responding executives gathered here Auto Show media day emphasized the following factors:

• A belief, or at least hope, relations between Russia and the United States and Europe will heal broken within a few years.

• decline, the value of the Russian ruble and the possibility of high tariffs on Russian imports. Whether it is to encourage local production of automobiles, and to invest more in Russia.

Fiat, Sergio Marchionne, Chrysler's CEO is one of the executives said measured optimism.

"I believe that in the medium term, this will stabilize, I would return to normal to a certain extent," Marchionne said. "The only reason I say this is a rather ugly alternatives are not only for Europe but also in general."

Car manufacturers seem reluctant to give up what is seen as a major growth market. They hope by Roland Berger recent report conducted reinforcement, expressed opposition to the West imported cars, the Russian government embargo will hurt more by reducing the tax and customs revenues.

However, Roland Berger warned that "sanctions car - even if it does not have the economy - they are possible" Asian carmakers may be the main winners of a trade war between Russia and the West in, the report said.

Car manufacturers are particularly concerned about the value of the ruble dropped 11 percent since February 28, transferred to the Russian annexation of Crimea. They responded as follows to adopt the Japanese yen fell strategy - to build local sales.

Carlos Ghosn, Renault - Nissan Alliance's chief executive, said the ruble devaluation and tariffs mean "Sales of imported cars is almost impossible" in Russia.

"The only thing you can do is location, location, location, just to get out of the trap to create exchange rate caused by political events," Ghosn said.

Similarly, Ford of Europe COO Barb Samardzich said the Russian government to promote local production of "our best interests." Ford has not stopped investing in Russia.

"We can find and get more rubles, less exposed," Samardzich said.

However, not all car manufacturers are optimistic.

GM's Opel unit has frozen plans to expand production at its assembly plant near St. Petersburg, said Opel CEO Karl - Thomas Newman.

"Now we are before we get a better understanding of how it is going to invest just very, very carefully in Russia," Newman said. He acknowledged that the expansion of GM production company did not "freeze."

Mike Colias, Lindsay Chappell, Diana and Larry DT Kurylko Vellequette contributed to this report.

 

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