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22 Sep, 2010 13:25

Automaking gains boost with two new plants

Russian Prime Minister, Vladimir Putin, has officially opened Hyundai and Magna plants in Saint-Petersburg, with experts saying this will add substantially to developing the country's automotive industry.

As sales of locally made cars return to growth and global brands continue to expand their presence, the Russian government is seeking to develop domestic manufacturing by ensuring local production of car components.

At the opening ceremony Vladimir Putin promised to continue supporting foreign investors and creating friendly environment for industry development in the country.

“We will create more attractive investment terms in Russia to make it profitable for foreign companies to work here; we will also make sure that production will be of the necessary quality and volume to cover the demand of the internal Russian market and provide good terms for export abroad.”

Saint-Petersburg with its automotive cluster is seen as setting an example of how Russia goes about further industrial development. Prime Minister Vladimir Putin has opened the facilities of two more residents at this techno-park – the Hyundai plant, which will be its first full-cycle car production enterprise in Russia, and Magna auto parts factory, intended to be Hyundai's major supplier. A car utility plant built by the Canadian company will have an annual production capacity equivalent to $100 million.

Magna has signed supply agreements with Hyundai, General Motors and Nissan already working in Saint-Petersburg area even before its own plant has been officially opened. With Magna's enterprise the idea to localise full-cycle car production in Russia will finally become a reality.

Donald J. Walker, Magna's Co-Chief Executive officer, says his company is looking at further Russian growth.

“Car plants having an assembly line will continue to grow, which means autopart industry needs to grow. So, whether we have 10 plants here in 10 years or 30 plants really depends on what we are asked to do by our customers and how competitive we are. But there's a strict key growth strategy for Magna to grow our businesses in Russia.”

As much as 60% of parts for Russian car production could be made locally within the next 6 years. The government believes the increased localization along with more full-cycle car factories will provide Russia's auto industry with a much needed shot in the arm.