The Russian government is poised to make huge cash injections into its moribund auto industry with the aim of making it globally competitive by 2015.
The sweeping plan calls for a massive £40bn investment over 10 years, of which the government will provide £3.6bn. The plan also calls for another £3.3bn to be provided by the state for the “purchase of foreign assets”.
Russian estimates suggest that the domestic industry will need as much as £14bn over the next decade simply to stay afloat and £7bn to re-equip its ageing factories.
According to a report in the Moscow Times, government officials describe the state of the car industry as “critical” and suggest it is “likely to disintegrate” within three to five years without a long-term rescue plan.
The internal report says Russian car technology is up to seven years behind the West and notes that Russia’s automotive components sector is “almost completely non-existent”.
It’s also estimated that Russian car workers are 50 to 75 per cent less efficient than the global industry best and that factory equipment is 60 per cent worn out.
It is unlikely that Russia’s car industry can catch up without significant outside help. The £3.3bn fund for buying foreign assets could be used to purchase modern platforms and engines developed in the West but phased out early as part of restructuring plans.
Alfa Romeo’s relatively modern Premium platform is likely to be dropped in the next few years, making it a potential target for Russian cash.
Lada’s tie-up with Renault is also off to a slow start, although there were plans to supply the ageing Dacia Logan platform for future Lada models.