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AutoEvolution 2016. Localization of Kaluga’s Automotive Industry and Export Orientation

On October 14, Kaluga hosted AutoEvolution 2016, the VII International Forum on Development of Automobile and Automotive Component Manufacturing in Russia. The forum has become an authoritative business platform where representatives of governmental structures, manufacturers of automobiles and automotive components, experts and analysts discuss burning issues of the automotive industry, share effective technological and management solutions, establish contacts and exchange ideas for business development in complex economic conditions.  Petr Fradkov, CEO of the Russian Export Center, joined the forum for the strategy session “Lessons of the crisis. What can facilitate development of the automotive industry today and what should be expected tomorrow?”.

Among key discussion issues were strategies for development of the Russian automotive market until 2025, development of export potential of Russia’s automotive clusters, mechanisms of cooperation between local manufacturers of raw materials and automotive component manufacturers, integration of automotive plants into logistics chains and incentives for automotive industry development.

Governor Anatoly Artamonov spoke about Kaluga’s automotive cluster, which currently represents 30 companies – 3 OEM plants and 27 automotive component manufacturers. “Companies are adapting to market challenges and finding new growth opportunities, which include enhancement of cooperation ties, collaboration with local manufacturers and model range expansion. Thus, Volkswagen Group Rus launched production of a sports version of the Volkswagen Polo GT sedan and is preparing to introduce a new Tiguan. PCMA is working on commercial versions of its models. Volvo is doubling production volumes and planning to organize manufacturing of trucks with automatics transmissions. Production of automotive components increased by 22% this year. Continental and Fuyao are extending to external markets and exporting their products”, commented Anatoly Artamonov.

It was noted that Russia is moving towards an export oriented economy. According to Petr Fradkov, Kaluga Region’s experience is a good example in this area. “The ability to work on external markets is an indicator of the quality of products and business KPI. Kaluga Region is among leaders in exports. In the first half of 2016 export volumes were 16% greater than in the same period of 2015. Clearly, this indicator reflects the efficiency not only of the automotive industry. However, volumes are growing and this is a positive trend. The geographic structure of exports is changing as well with the share of “comfortable markets” decreasing. The share of CIS countries reduced from 70% to 45%, exporters are moving into new markets”, he explained.

Forum participants also discussed support measures. The Russian Export Center has developed programs to support exports in priority industry segments. This year, they include the automotive industry and the agricultural machinery industry. Subsidies are provided to cover costs associated with external market entry. The automotive industry was allocated over RUR 3 billion. Effective automotive industry support measures will also include the introduction of special investment contracts. They will be additional to currently existing support measures enjoyed by automotive companies. These contracts will allow manufacturers to set up semi knocked down assembly of new export oriented models without losing benefits for component imports. Execution of a special investment contract will be a requirement for the automotive manufacturer to get state support: subsidies and benefits similar to those provided to industrial assembly facilities.


Representatives of Kaluga’s automotive cluster spoke about their results and prospects. Continental Kaluga General Manager Georgy Rotov stated that the tire plant achieved full production capacity. In the beginning of September, the production line of Continental’s tire plant in Kaluga manufactured its 5,000,000th tire. This was achieved in less than 3 years since the plant’s official opening. In comparison with the same period of the previous year, the company increased its production volume by 43%. Overall, in 2016, the plant expects to manufacture 3,000,000 tires, thus, exceeding the 2015 result by 50%. The company’s product portfolio currently includes more than 280 varieties of tires. The share of exports is up to 45%.

PCMA Rus Chairman Christophe Bergerand: “The Russian market is strategic for us. It is important for the company to adapt its products to the local consumer and to develop cooperation with local manufacturers. By 2017, several models manufactured at the Kaluga plant will be localized by 50%. And each year we will introduce a new localized product”.

The forum program included visits to facilities of Kaluga’s automotive cluster – VOLKSWAGEN Group Rus, Peugeot Citroen Mitsubishi Rus, Continental Kaluga - and individual one-on-one partner meetings (Matchmaking Event).