The New York Times and the Automotive News experts draw a future for Moscow under the control of Beijing: at stake there would be not only the internal market, but also the ability to produce vehicles to be sent to Europe
Gianluigi Giannetti
March 10
In the tragedy of a war, strategies that will condition the future of Russia and Europe risk lurking, with an advantage for China. Industrial events that also become social if they concern the energy transition effort in our country, but also the defense of employment. In recent days Andrei Turchak, general secretary of the United Russia party who refers to Vladimir Putin, sent an all-too-clear message to the West: “We can nationalize companies that close in Russia”. This is an attack, this time only verbal, on the decisions of foreign companies which in recent weeks have felt obliged to stop their factories on the territory of the Russian Federation. The reference to the automotive sector is all too clear. The Volkswagen and Stellantis groups have factories in the town of Kaluga, about 180 km southwest of Moscow, but the German company has a second plant in Nizhny Novgorod. Mercedes operates its own plant north of Moscow, while BMW has had an operational partnership since 1999 with the local manufacturer Avtotor for engine assembly in Kaliningrad. Most exposed of all is Renault, which has controlled the Avtovaz group since 2017 with its two plants in Togliatti and on the outskirts of Moscow. Production is currently at a standstill everywhere, but the scenarios that open unexpectedly.
unexpressed potential
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Unexpressed potential – The nationalization of factories operating in Russia would mean a clear break with the Western companies that have naturally built and managed them so far. A choice of field that would seem rather risky at a time when the country is subjected to very harsh sanctions that limit its commercial outlets to Europe. All true, as long as you do not take into account the scenario that also the authoritative Automotive News consider at this point as likely. Russia can become a car colony of China. The data, moreover, are clear, as underlined by the New York Times. Moscow’s capacity can reach 2 million vehicles produced every year at full capacity, with a market that in 2021 instead reached 1.67 million units sold, of which 18% are imported. This means that the 32 companies of the entire Russian supply chain, including those of components, objectively have a considerable unexpressed potential, and that it remains more than ever so in a moment of extreme inflation of the ruble which cancels the purchasing power of consumers. Meanwhile, Russia has already undergone a decisive entry of Chinese car manufacturers, going from 42,700 vehicles imported in 2020 to 122,800 in 2021. Not enough, because it has already gone further.
almost zero cost
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The collapse of the currency and the shutdown of factories set all the conditions for resolving in Russia what, for the Chinese manufacturers, has instead become a problem at home, starting with the logistical costs of bringing the cars closer to the European market, unsustainable for a generation. of models destined to establish itself in Europe thanks to a surprising level of reduced prices, especially as regards electric cars. Once the conflict is over, inserting Russia as a productive stage in the “Silk Road” which has already laid solid foundations in Africa could allow the movement of “semi-finished cars”, bypassing the blocks. Officially, China already produces vehicles in Russia, with Great Wall operating a plant in the city of Tula, 200km south of Moscow, while Chery is planning to return, following the closure of its Cherkessk plant in 2018. Geely, for its part, in 2017 it built a factory in Borisov, Belarus. According to many analysts questioned by Automotive Newsthere is a lot on the plate, starting with a cost of energy that the sanctions have effectively eliminated, just as inflation has drastically reduced that of skilled labor, while the availability of raw materials is eloquent.
a treasure underground
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The Rusal company produced 3.8 million tons of aluminum in 2021, and is the first company in the sector worldwide, with a market share of 6%. Based on the findings of the Geological Institute of the United States, 7,600 tons of cobalt were extracted in Russia in 2021, or more than 4% of the global production of one of the most crucial components for the construction of batteries. The remainder is produced only in the People’s Republic of Congo. Also from Russia comes 3.5 of copper and 4% of steel, demonstrating the historical solidity of its metallurgical industry, but under the heading Platinum and Palladium, indispensable elements for the catalyzing systems of traditional motor vehicles, Moscow checks respectively 10% and 40% of the world annual production. Now it will be necessary to understand in favor of whom.
March 10, 2022 – 2:24 pm
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