NOTHING VENTURED

RENAULT continues to invest in Moscow

Localization of production is a goal for many foreign companies currently working in Russia. There are more than a few examples of successful production localization.

The most striking of these, perhaps, is Renault Russia. This is not a surprise since, after all, relations between the French automotive group with Russia began at the beginning of the XX century. It was cars from this company that the Russian imperial family travelled in. According to the analytical center Autostats rating, Renault cars are currently amongst the most popular in the country. In 2017 two of the top three best-selling cars were the Renault Duster and Renault Captur.

The impulse for Renault Russia’s development was given at the end of winter of this year. The Russian capital’s mayor, Sergei Sobyanin, and vice-president and director of Renault’s corporate communications, Antoine de la Rochelbrochard, signed an agreement for the automobile production development in Moscow.

«Stories about the decline in demand for cars and fears of slowing development of automobile production have not come true, and Moscow is increasing its car production capacity. We are signing an agreement with Renault to provide the company with tax benefits so that the company can invest in new technologies, new equipment, the creation of industrial driverless cars and delivery of cars for import.” – said Sobyanin.

The mayor announced that the automobile cluster creates high-paying jobs in Moscow. “I am thankful to Renault that, despite all the difficulties and complications, they continue to invest in Moscow, in Russia, in so doing developing automobile production.”

The agreement extends existing measures of support for the automobile sphere until 2020. The document states that the company is bound to continue the modernisation of its factory and increase the release of cars. Renault will attract new investors for automobile manufacturing. In addition the firm took upon itself the obligation of taking interns and hiring graduates of Moscow tech schools.

The city’s authorities, in their turn, will examine the possibility of maintaining tax discounts for automobile manufacturing companies. In particular, they may maintain import discounts and property tax from 2018 to 2020 inclusively. Also in the agreement is the maintenance of rent payments for car company’s land property.

This is not the first agreement signed by Moscow’s government and the French group aimed at the development of automobile manufacturing within the bounds of the city.  The fact is that Renault is very important for Moscow. The automobile factory is one of the largest taxpayers: the company’s tax receipts make up around 1 billion rubles a year. Sergei Sobyanin has noted more than once, this factory’s work is an example of how to re-organize Moscow’s industrial production.

The joint enterprise of Renault and Moscow’s JSC Avtoframos (CJSC Renault Russia) was created in 1998. Now Moscow’s Renault is a full-cycle plant, with welding, painting, and assembly departments The enterprise has a high level of localized production among foreign automobile manufacturers working in Russia (more than 60%). Incidentally, according to official data, activity localization at the factory comprises 70%. That means that 70% of assembly parts come from Russia, the remaining 30% is from abroad, including France.

An engineering and technical center and underground testing facility operates at the factory. In 2013 Moscow authorities and CJSC Renault Russia concluded an agreement on the development of automobile production at the territory of the South Port industrial zone in Pechatniki. Over five years 613 thousand automobiles have been produced at this enterprise, and investment volume comprised 14.3 billion rubles.

According to information from the authoritative automobile publication Autoreview, as a result of the signed agreement the French side received guarantees for preservation of the rules of the game on the Russian market before launching a new model at the Moscow plant. The fact is that production modernization has been noticed at the enterprise: the installation of over a dozen new robots is planned, with the aim of improving the quality of welding operations the achievement of high production flexibility. This is a round-about confirmation that the new car will stand out considerably from the off-road models being released now in Moscow -Renault Kaptur, Renault Duster and Nissan Terrano – that are built on the В0 platform, the same which is used in the Logan model.

According to Autoreview’s journalists, there is not much known about the new model so far. In September of last year the Renault designer Renault Laurens van den Acker told Autorevue about the new crossover, which will be a “true Renault,” meaning that it will not become just another variation of the Dacia. A month later the company presented a slide of the new model, the crossover C-class with a coupe silhouette at a company presentation.

It is expected the future car will be a seven-person off-road vehicle, and will be built on the same platform as Duster, the most well-sold model in Russia from Renault’s Moscow car factory. The new crossover is designed for four markets: Russia, Brazil, China, and South Korea.

Aside from the Duster, the Moscow car factory is current releasing the Renault Captur and Nissan Terrano crossover models. The production capacity is enough to manufacture another crossover: over 10 months in 2017 82 thousand cars were manufactured at the facility, with 190 thousand project maximum per year. Coupe-crossover will help Renault attract new consumers, most of all those who live a sporty style, an interviewee familiar with this topic comments in the newspaper Vedomosti.

Sales of the new model will, as a minimum, be the same as Kaptur’s, and its profit will be even higher. 30966 Kaptur models were sold last year in Russia, with 22% of all of Renault’s sales – and that was second after the Duster model. As expected, coupe-crossover Renault ‘s price will be between the locally-produced Kaptur (from 879 thousand rubles) and the imported Koleos (from 1 million 749 thousand rubles), writes Vedomosti newspaper, a business newspaper. It is thought that the new model will compete with all other crossover models in its price bracket, but it will not have any direct competitors – the only similar kinds of models so far belong to premium-class makes.

The new model’s world premier will take place at the Moscow dealer in 2018, which is planned for the end of August/ beginning of September. The crossover will become the first embodiment of Renault Russia’s new brand-strategy “My Country. My invention. My Renault.”

Official information:

In 1992-1993 Renault opened its first Russian office in Moscow, and in July 1998 signed an agreement with the government of Moscow concerning the creation of the joint car factory “Avtoframos”. This name was created by joining auto, France, and Moscow. After one year at the AZLK’s factory a partial-production manufacturer was opened, which released the Renault MEGANE and Renault 19, followed later by the CLIO Symbol. In 2003 construction for a a full-cycle enterprise was started for the production of the Renault LOGAN, which was concluded in April 2005. By 2006 LOGAN became the most well-sold foreign vehicle in Russia. Renault’s share in the became the best-selling foreign car in Russia. Renault JSC Avtoframos‘s capital share gradually increased, until it reached 100% in November 2012. In July 2014 the Russian factory changed its name to closed CJSC “Renault Russia”, connecting its name directly with Renault’s renowned history.

Renault’s network of dealers became the largest amongst foreign brands in 2014, with more than 180 dealerships from Kaliningrad to Vladivostok. Renault’s vehicles have proven themselves to be reliable in the difficult climates and road conditions of Russia and have indeed deserved the name of their national mark.

 

 

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