U.S. Automotive Parts and Components Business Development Mission to Russia |
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Elnora Moye
Federal Register
September 22, 2011
[Federal Register Volume 76, Number 184 (Thursday, September 22, 2011)]
[Notices]
[Pages 58778-58780]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-24290]
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DEPARTMENT OF COMMERCE
International Trade Administration
U.S. Automotive Parts and Components Business Development Mission
to Russia
AGENCY: International Trade Administration, Department of Commerce.
ACTION: Notice.
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Mission Description
The U.S. Department of Commerce, International Trade
Administration, U.S. and Foreign Commercial Service (CS), is organizing
an Automotive Parts and Components Business Development Mission to
Russia on April 23-28, 2012. Led by a senior Department of Commerce
official, this mission is designed to provide an opportunity to explore
Russia's rapidly expanding car and truck assembly market to a diverse
cross section of companies selling goods and services into the
automotive sector, including but not limited to: components for vehicle
manufacture, replacement parts, aftermarket products, repair equipment,
capital equipment used for vehicle manufacture, testing equipment, and
software and engineering services.
Mission participants will benefit from expert briefings on the
Russian market as well as on current developments in Russia's emerging
auto sector. The mission program will include opportunities to meet key
Russian Government officials and decision-makers, one-on-one meetings
with potential business partners and site visits to automotive assembly
plants and component manufacturers. The U.S. and Foreign Commercial
Service is targeting a minimum of 15 and a maximum of 20 U.S.
companies.
Commercial Setting
During Soviet times, average citizens spent years on waiting lists
for the 4 or 5 models of available cars, most based on 1960s
technology. Quality control was minimal.
In 2010, automobile ownership in Russia--a country of 140 million
consumers--grew to more than 244 vehicles per 1,000 inhabitants, 70%
higher than the 2001 rate of 140 vehicles per 1,000 inhabitants. This
compares to around 850 cars for every 1,000 Americans. Sales of cars
and trucks in Russia are currently growing at an annual rate of 30
percent. Approximately 34 million cars are on Russian roads today, of
which 14 million are foreign brands.
While sales of Russian automobiles declined in 2008, due to the
world-wide financial crisis and recession, car sales have picked up
again as the Russian economy recovers. In 2010, Russian customers
purchased 1.9 million cars. This figure includes 646,000 new Russian
cars and 1.25 million foreign cars, both imported and produced in
Russia. Importers forecast continued rapid growth of approximately 20
percent in 2011. If these trends continue, most experts project Russia
will be the largest automotive market in Europe in the next few years.
Prior to the global financial crisis that started in 2008, Russia's
economy was growing at a healthy pace. Annual GDP growth averaged 7.5
percent from 2001-2007. In 2008 and 2009, Russia experienced negative
GDP growth. However, Russia's economy began to grow again in late 2010,
experiencing GDP growth of 3.8% in the last two quarters of 2010.
Economists now forecast Russia's economy, supported by higher prices
for oil, gas and raw materials, to continue growing at around 4%
annually in the near term.
Russia's giant auto plants remained largely unaffected by the
economic turmoil that followed the collapse of the Soviet Union. During
the inflationary 1990s, auto parts became a valuable barter commodity.
As the Russian market opened to imports, the few wealthy Russians able
to afford imported vehicles opted for new foreign cars. At the same
time, imported used cars began to compete with new Russian cars in the
rapidly expanding mass market. The financial crisis of 1998 and the
significant devaluation of the Russian ruble made imports more
expensive and thus provided a stimulus to Russian manufacturers.
Russia's auto industry has largely been centered in the city of
Togliatti in the Samara region and in Nizhny Novgorod. The giant
AvtoVaz factory, one of Russia's largest industrial enterprises, is
located in the city of Togliatti. The plant reported output of 517,000
cars in 2010 and accounted for 30 percent of Russia's automotive
output. AvtoVaz produces cars in the $5,000 to $15,000 range for the
Russian market and exports about 8% of its output to the former Soviet
republics.
The GAZ plant in Nizhny Novgorod has ceased production of passenger
vehicles. The last Volga Sibir--a modified version of the Chrysler
Sebring sedan--rolled off the assembly line October 31, 2010. The
factory continues to produce the popular Gazelle line of light trucks
and minivans, and the company also produces general purpose heavy
trucks that are used in a variety of industries.
UAZ in Ulyanovsk produces light utility and military vehicles. The
UAZ-469 all terrain vehicle was the standard off-road vehicle for the
Soviet armed forces and was used by armies around the world due to its
reputation for reliability and ease of maintenance. Today, the
company's UAZ Hunter is a successor vehicle to the 469 made for the
consumer market, and it has also introduced the UAZ Patriot--a mid-size
SUV with an economical price. UAZ produced 49,000 vehicles in 2010.
Russia's largest automotive corporation KAMAZ is ranked 13th among
the world's heavy truck producers and is number 8 in the production of
diesel engines. Its trucks have won the Dakar Rally a record 10 times.
It is the largest manufacturer of heavy trucks in the former Soviet
Union. Its massive factory in Naberezhny Chelny, Tatarstan has
production capacity for over 100,000 vehicles. The company's diesel
engine plants include wholly-owned subsidiary Kamaz-Diesel and Cummins-
Kama, a
[[Page 58779]]
joint venture with the U.S. company Cummins.
Foreign automakers have taken notice of the Russian automotive
market's potential for significant growth and are building assembly
plants to meet the increasing Russian demand for high quality
automobiles. General Motors has a $335 million plant in Togliatti, a
joint venture with Russian auto giant AvtoVaz that produces an
inexpensive SUV, under the Chevrolet-Niva brand, which is based on an
AvtoVaz-designed platform. The GM/AvtoVaz joint venture manufactures
60,000 vehicles for the Russian market and for export through AvtoVaz's
dealerships throughout the former Soviet Union and GM's distribution
network. GM's newest plant was built in St. Petersburg in 2008. It has
a production capacity of 50,000 cars, and currently produces four
models: two SUVs--Chevrolet Captiva and Opel Antara--and two sedans--
Chevrolet Cruze and Opel Astra.
Both GM and AvtoVaz have an interest in working with the more than
200 automotive component manufacturer suppliers in the Samara region to
improve the quality of their products and upgrade their technology.
Ford opened its first assembly plant in Russia in 2002 near St.
Petersburg. The plant has a capacity of 125,000 vehicles and currently
produces two models--Ford Focus and Ford Mondeo. In 2010, the Ford
Focus was Russia's most popular foreign car, and its 5th top seller
overall. Assembled in Russia from foreign-made parts and with a sticker
price of $16,000-$25,000, the Russian-made Ford Focus is significantly
less expensive than the price of similar imports. Consequently, Ford is
working with local components manufacturers to develop their
capabilities as suppliers, and is encouraging Western manufacturers to
consider establishing facilities in Russia. In February 2011, Ford
announced its intention to form a joint venture with Sollers OJSC to
produce cars in Russia under the Ford nameplate. This proposed joint
venture will produce cars under the Ford brand at the Ford plant
outside St. Petersburg and at Sollers's plant in Tartarstan. It will
also produce engines; operate a stamping facility that will provide a
higher level of local parts content for Ford vehicles built in Russia;
and establish research and development activities.
In addition to Ford and GM, major international OEMs have made
significant investments in St. Petersburg and surrounding Leningrad
Oblast, turning it into a new automotive assembly ``cluster.'' Nissan,
Toyota and Hyundai opened new plants in St. Petersburg or in Leningrad
oblast between 2007 and 2009. Toyota's facility, located near the GM
plant in Shushary, was built in 2009, and has a capacity of 50,000
vehicles. It currently produces the Toyota Camry. Nissan opened its
50,000 vehicle plant to produce the Nissan X-Trail and the Nissan
Teanna in St. Petersburg's Kamenka district in 2009. Hyundai is the
latest arrival. It opened its 100,000 car plant also in the Kamenka
district in 2010 to produce the Solaris, a sub-compact car designed
specifically for the Russian market. Significantly, Hyundai has also
brought with it a number of Korean automotive suppliers that will help
it to meet Russian government demands for increased localization of
foreign automotive assembly in Russia.
Investments by European manufacturers have also created another
automotive ``cluster'' in Kaluga. Volkswagen Group has invested more
than 500 million Euro in its 150,000 capacity plant where it produces
the Volkswagen Passat and the Skoda Octavia. Volvo's truck assembly
plant, which opened in 2009, has an annual capacity of 10,000 Volvo and
5,000 Renault trucks. PSA Peugeot Citroen opened its plant in March
2010 to build Peugeot 308s for the Russian market, as well as Citroen
and Mitsubishi brand cars.
There are also a number of smaller international automotive
ventures in Russia. In the Russian ``exclave'' of Kaliningrad, the
Autotor joint venture with KIA and BMW assembled 170,211 cars in 2010
and plans to assemble 240,000 in 2011. In Taganrog, Tagas is assembling
several Hyundai models: The Accent and Sonata sedans, the Porter LCV
and Aerotown and County buses. Tagas produced 31,000 vehicles in 2010,
and plans to double production to 60,000 in 2011. Scania's plant in St.
Petersburg has capacity to produce 1,500 trucks per year.
Western tire makers are also operating in Russia. The French
Michelin built a plant outside Moscow in 2004 that makes 2 million
tires per year. Finland's Nokian Tyres is expanding its plant near St.
Petersburg to produce 10 million tires per year by the end of 2011.
Goodyear has a joint venture with a Russian tire maker in Yaroslavl and
has explored building a tire factory there. Michelin's plant was built
with the help of a $20 million investment from the EBRD, which has
targeted the Russian automotive sector for strategic investment.
Bosch, with its Russian joint venture partner, supplies 82 percent
of the Russian ignition plug market from its 30 million-unit capacity
plant in Saratov. Lear manufactures car seats in a facility within
GAZ's plant in Nizhny Novgorod. Outside of that town, Ingersoll Rand
makes power tools and steering columns. Delphi produces wire harnesses
at its plant in Samara, while in St. Petersburg Johnson Controls and
Tenneco make, respectively, car seats and exhaust systems.
Given the current dynamics in this automotive sector, the U.S.
Commercial Service strongly believes that significant opportunities for
growth and expansion exist in Russia for U.S. manufacturers of
automotive parts and components. Russians are prepared to pay for
quality vehicles, while at the same time the Russian automotive
manufacturers and the Russian government are seeking technology and
business partnerships to meet this demand.
Industry experts have indicated that there are especially good
prospects for manufacturers of engines, electric and electronic
components, trim, exhaust systems, plastic parts and instrumentation.
In addition, there are increasing opportunities for export of air
conditioners, ABSs, airbags, power steering and automatic
transmissions, that are currently not manufactured in Russia.
Mission Goals
The U.S. Automotive Parts and Components Business Development
Mission to Russia will provide U.S. original equipment parts
manufacturers a timely, efficient and cost effective opportunity to
explore current business prospects in Russia.
Mission Scenario
The Mission program will begin in Moscow and include site visits
and consultations in St. Petersburg and in Samara and Togliatti. In
addition to market briefings by industry experts, mission members will
have the opportunity to meet key Russian Government officials
responsible for formulating and implementing the government's
automotive industry policies and plans and for one-on-one meetings with
potential business partners that match their market interests.
[[Page 58780]]
Timetable
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Sunday, April 22, Moscow, Russia....... Arrive Moscow.
Evening: Welcome event.
Monday, April 23, Moscow, Russia....... Briefings/Presentations/
Meetings with key Russian and
American automotive industry
executives, consultants and
officials followed by an
evening VIP Reception.
Tuesday, April 24, Moscow, Russia...... Presentations by major
automotive companies, followed
by one-on-one meetings. Depart
for St. Petersburg.
Wednesday, April 25, St. Petersburg, Meetings with auto industry
Russia. representatives and regional
government officials and plant
visits in St. Petersburg and
Leningrad Oblast. Evening
networking event and/or
cultural program.
Thursday, April 26, Samara, Russia..... Depart for Samara/Togliatti.
Meetings with auto industry
representatives and regional
government officials and plant
visits in Samara followed by
evening networking event.
Friday, April 27, Moscow, Russia....... Meetings with auto industry
representatives and regional
government officials and plant
visits in Togliatti, followed
by return to Moscow.
Saturday, April 28..................... Depart Moscow for U.S.
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Participation Requirements
All parties interested in participating in this mission to Russia
must complete and timely submit an application package for
consideration by the Department of Commerce. All applicants will be
evaluated on their ability to meet certain conditions and best satisfy
the selection criteria as outlined below. A minimum of 15 companies and
a maximum of 20 companies will be selected to participate in the
mission from the applicant pool.
Fees and Expenses: After a company has been selected to participate
in the mission, a participation fee paid to the U.S. Department of
Commerce is required. The participation fee for one company
representative will be $4,952 for small or medium-sized enterprises
(SME) \1\ and $5,701 for large companies, which will cover one
representative.\2\ The fee for each additional firm representative
(large firm or SME) is $1,220. The participation fee covers all in-
country travel--airport transfers and bus transportation to/from group
meetings and site visits, train fare from Moscow to St. Petersburg,
airfare from St. Petersburg to Samara and from Samara back to Moscow,
as well as one-on-one meetings with potential Russian business
partners. The Commercial Service will assist in booking hotels at
favorable rates, but lodging costs, meals and incidental expenses will
be the responsibility of each mission participant.
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\1\ An SME is defined as a firm with 500 or fewer employees or
that otherwise qualifies as a small business under SBA regulations.
\2\ Parent companies, affiliates, and subsidiaries will be
considered when determining business size. The dual pricing reflects
the Commercial Service's user fee schedule that became effective May
1, 2008.
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Conditions for Participation: An applicant must submit a completed
and signed mission Application and a completed Market Interest
Questionnaire, which must include adequate information on the company's
products and/or services, primary market objectives, and goals for
participation. If the Department of Commerce receives an incomplete
application, the Department may reject the application, request
additional information, or take the lack of information into account
when evaluating the applications.
Each applicant must also certify that the products and services to
be promoted through the mission are either produced in the United
States or marketed under the name of a U.S. firm and have at least 51
percent U.S. content of the value of the finished product or service.
Selection Criteria for Participation: Selection will be based on
the following criteria:
Suitability of the company's products or services to the
market;
Applicant's potential for business in Russia and in the
region, including likelihood of exports resulting from the mission; or
investments that will lead to exports.
Consistency of the applicant's goals and objectives with
the stated scope of the mission.
Referrals from political organizations and any documents containing
references to partisan political activities (including political
contributions) will be removed from an applicant's submission and will
not be considered during the selection process.
Timeframe for Recruitment and Applications
Mission recruitment will be conducted in an open and public manner,
including publication in the Federal Register, posting on the Commerce
Department trade mission calendar (http://www.trade.gov/trade-missions)
and other internet Web sites, press releases to general and trade
media, e-mail, direct mail, broadcast fax, notices by industry trade
associations and other multiplier groups, and publicity at industry
meetings, symposia, conferences, and trade shows. CS St. Petersburg
will conduct a webinar on automotive opportunities in the Russian
market in November 2011; the mission will be promoted during the
webinar as well.
Recruitment for the mission will begin immediately and will close
on January 6, 2012. The U.S. Department of Commerce will review all
applications immediately after the deadline. We will inform applicants
of selection decisions as soon as possible. Applications received after
the deadline will be considered only if space and scheduling
constraints permit.
Contacts
Eduard Roytberg, Senior International Trade Specialist, CS Ontario,
CA, Tel: 1 (909) 466-4138. Fax: 1 (909) 466-4140.
Eduard.Roytberg@trade.gov.
Alexander Kansky, Commercial Specialist, CS St. Petersburg, Tel: 7
(812) 331-2881, Fax: 7 (812) 331-2861, Alexander.Kansky@trade.gov.
Vladislav Borodulin, Commercial Specialist, Tel: 7 (495) 728 -5235,
Fax: 7 (495) 728-5585, Vladislav.Borodulin@trade.gov.
Kenneth C. Duckworth, Principal Commercial Officer, CS St.
Petersburg, Tel: 7 (812) 326-2560, Tel: 7 (812) 326-2561,
Kenneth.Duckworth@trade.gov.
Elnora Moye,
Commercial Service Trade Mission Program, U.S. Department of Commerce.
[FR Doc. 2011-24290 Filed 9-21-11; 8:45 am]
BILLING CODE 3510-FP-P