The North American International Auto Show in Detroit has been an important barometer for the global automotive industry for more than a century and this year was no exception. Thousands of industry executives, enthusiasts and experts poured into Detroit’s Cobo Center last week to hear industry leaders discuss and reveal the latest automotive trends and innovations. The growing importance of BRIC markets ranked high among key topics of discussion as emerging market sales growth continued to stay strong after offsetting declines in other markets last year.
With this trend in mind, on January 12, a distinguished group of industry, international trade and Russia experts came together in Detroit for a U.S. Russia Business Council dinner on the development of the Russian automotive industry. The dinner, which was sponsored by Ernst & Young, GM and the Ford Motor Company attracted a variety of participants including those with considerable experience in the Russian market and some with little-to-none. Of those with little experience, many were suppliers interested in learning more about the Russian automotive industry before making an official decision to invest in it.
The panelists, who included executives from GM and Ford along with key officials from the U.S. Department of Commerce and the U.S. Consulate in St. Petersburg, gave an optimistic outlook on the future of Russia’s automotive industry and the role of foreign companies in its expansion.
Representatives from Ford and GM described Russia as a rising star in the automotive world, with GM Russia President Jim Bovenzi saying his company plans to invest $1 billion over five years to more than double its production in Russia by 2015 and Ford VP Alan Draper saying Russia "will (soon) be one of the most important markets in the world."
Both companies already have strong vested interests in Russia. GM’s plant in Togliatti is one of its best-performing facilities in the world, while Ford continues to expand production at its plant in Vsevolozhsk, expecting to boost production of new vehicles by 20.2 percent in 2012 according to a recent announcement from CEO Ted Cannis.
Both Draper and Bovenzi agreed that the Russian government’s push toward localizing production will benefit foreign automakers in Russia by weaving them closely into the domestic industry’s development, thus increasing their importance and share of voice in the market.
The panelists from the U.S. Department of Commerce and U.S. Consulate in St. Petersburg commented more broadly on the Russian market, noting that Russia has positive parameters for investment and is rapidly becoming more popular among U.S. investors, particularly in the automotive space. All of the panelists, however, agreed that now is the time to invest in Russia, particularly in light of its upcoming WTO accession.
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