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17 Mar, 2010 07:16

Carmakers look for local parts supplier to come up to speed

International car manufacturers have the bodies - they just need the parts. That's the message from global car makers working in Russia, who are struggling to find the right quality and price.

Despite a fifty percent slump in car sales last year, top executives meeting at the Adam Smith Automotive conference in Moscow were upbeat about the future of car sales here.

The sticking point is localization. Rules state foreign brands must source half a car's components locally – within 7 years. Martin Jahn, Vice President, Sales and Marketing at VW Russia says local quality is an issue.

“We have selected 30 suppliers in Russia. Most of them are international suppliers only five of them are Russian indigenous suppliers. When we look at the situation at the moment most of the local suppliers do not meet our quality and efficiency standards.”

This is in line with the findings of the largest commercial vehicles producer – GAZ group.

The company delivered pre-production vehicles for consumers to test and was surprised at the feedback, according to Bo Inge Anderson, President of GAZ Group.

“We listened to our customers. We have two million of them. We said what do you want? I was surprised that first thing on the wish list was a foreign clutch.”

Renault admits that using a foreign supplier would be faster but the French carmaker is still looking for a local supplier, according to Senior Vice President Christian Esteve.

“We have seen in many other countries that by developing the local supplier you can achieve quicker the end value the right price on the market and progressively there is no reason why the local supplier cannot reach the level of cost and the level of quality that you have with foreign supplier.”

Components makers say they can raise quality – only if they get a sufficient volume of orders. And that's a problem while car sales remain at crisis-depressed levels.