Vladivostok becoming a manufacturing base for Japanese autos

The Russian government has started encouraging foreign car manufacturers to form alliances with local auto companies in order to boost the development of its own manufacturing industry, and at the same time reduce the country’s dependence on natural resources.  This strategy is expected to also lead to the development of Russia’s Siberian and Far Eastern regions.

As a result, Vladivostok, which has long been a thriving market for used Japanese vehicles, is now about to get transformed into a manufacturing center for new Japanese cars and trucks.  Recently, Nikkei, Japanese business daily reported that Toyota will soon become the first Japanese auto-maker to assemble automobiles in Russia’s Far Eastern regions. Toyota, Mitsui & Co – the Japanese trading house, and Russian car manufacturer Sollers are going to launch joint automobile production in 2012 in the far eastern city of Vladivostok.

Toyota will be providing auto-parts and production technology for this joint venture expected to build around 30,000 Toyota-brand vehicles, mainly saloons and off-road vehicles including the Land Cruiser Prado, each year. To begin with, the companies will be operating the production facilities of Sollers.

Another Japanese car-maker, Mazda Motor Corp., is also planning to commence vehicle production in Russia’s Far East. Isuzu Motors Ltd., that already has a joint venture factory with the Russian company Sollers in western Russia that manufactures small trucks, will be relocating the facility to Vladivostok. This factory will manufacture 5,000 units each year from 2012.

The Russian government will be reducing tariffs and the fares on the Trans-Siberian Railway once Japanese companies begin transporting vehicles to Moscow and different cities in the western regions of Russia.

In order to avail of such preferential treatment, however, besides automobile assembly, local factories will also have to introduce detailed processes in their manufacturing activities, such as welding and painting, within around 18 to 30 months after commencing operations. In addition, the factories will have to use more locally manufactured parts. A major problem will be finding local suppliers of high quality products.

According to Sergey Udalov, executive director of the Russian auto market research agency – Autostat, foreign vehicles are built using advanced technologies, and therefore, the government should provide additional help to domestic manufacturers.

Currently, most of the vehicles on the roads are used, right-hand drive, Japanese vehicles.

Recently, Vladivostok’s biggest open-air sales facility for second-hand vehicles had around 3,000 used Japanese vehicles on display.

Used Japanese vehicles have long been considered more reliable than Russian products even though many of the latter give high mileage. Exports of second-hand Japanese vehicles to Russia in 2009 fell drastically to 53,180 units, that is, less than 1/10th of 563,369 units exported in 2008. But exports increased to 105,478 units in 2010.

A large number of people are employed in jobs involving used Japanese vehicles in Vladivostok and the surrounding regions. Not surprisingly therefore, used Japanese vehicles have now become an integral part of the lives of the people in Russia’s Far East.

Since wide economic gaps still exist between western Russia and the country’s Far Eastern regions, the government has begun taking measures for the development of its Far East by taking advantage of the proximity of these parts to Southeast Asia and China. President Dmitry Medvedev is introducing structural reforms for stepping up manufacturing activities by improving the country’s communications infrastructure and supporting the development of information technology industries.

Tags: japanese autos russia