First-ever Russian-Japanese auto venture

Russian automaker Severstal-Avto and Japanese truck maker Isuzu have just formed the first joint venture between Japan and Russia in the motor industry.

The tie-up will produce Isuzu-branded trucks in Russia, although analysts warn the deal could spell the end for Russian motor brands.

Isuzu is one of the world's top truck makers, but its chairman, Yoshinori Ida, says it faces an uphill struggle to pull Russian manufacturing up to their standards.

“We have one year to improve Russian manufacturing standards before production starts. We are sending 30 specialists from Japan to train their Russian counterparts, because we are counting on the trucks being the same standard as the ones made in Japan,” Yoshinori Ida said.

The deal marks a shift for Russian companies to finally ditch their failing own brands and focus on making foreign models.

“We will build our new strategy around a foreign cluster of brands including Isuzu and Fiat, their engineering, research and development. Our main role in these joint ventures is to be a so-called 'gate', to use our local knowledge by building an acceptable parts and service network for their foreign technology,” said Vadim Sverdlov, CEO, Severstal-Auto.

“Russian car brands are probably already doomed in the fight against foreign manufacturers. Domestically-made trucks still sell thanks to their price markdown but within three years Russian consumer's quality demands will be the same as in the West,” he added.

Analysts are now predicting the death of the Russian-branded car industry.

“Avtovaz and UAZ currently survive because they are the only ones with a national service network, but it is an industry secret that new Russian cars break down and have to be returned to the salon up to six times in the first month. As soon as the likes of Isuzu get a proper parts and maintenance presence Russian automobile brands will die,” Andrey Lomanov, “What Car” Deputy Editor, explains.