OAO Severstal's management has made a strategic decision to position its automobile division as a supplier of metal spare parts for national and international car producers in Russia. Severstal's Deputy General Manager and head of the division Vadim Shvetsov announced the decision at the Investments into Russian Automobile Industry conference in Moscow yesterday. The conference is organised by the Adam Smith Institute. As Severstal's press centre reported, Mr. Shvetsov is convinced that in case investment conditions are made favourable for foreign car producers, the government would design a set of strict rules regulating local production of spare parts. In the beginning it will be a question of simple details, but with time technology-intensive parts, like engines and transmissions, will also be produced locally. That was how things were developing in China and India, where high car import taxes stimulated local assembly from locally produced branded spare parts.
Mr. Shvetsov pointed out that there is no successful joint production facility in Russia at this moment. In his opinions this is due to the fact that the market in Russia has not been fully understood yet. Many of the foreign producers lack the necessary corporate flexibility. Producing spare parts locally is also a challenge, many of the Russian car producers having outdated equipment and lacking financial strength.
Mr. Shvetsov pointed out that Severstal is fully prepared to cooperate with foreign producers and work on joint projects to set up assembly lines in Russia.
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