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OPINION

Russian automotive industry won't survive departure of foreign automakers

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The automobile industry had been given a priority. After the Soviet scarcity and squalor, we wanted foreign cars and something to be proud of. So we got down to work. We refused to make cars of our own right away. Why bother, when foreigners can do it better? The most important thing was to lure them into the country, let them build factories, under our direction of course. After all, they wanted us to drive good cars, so let them work hard.

We refused to make cars of our own straightaway. Why bother, when foreigners can do it better?

And as soon as foreigners, who had convinced themselves that Russia was attractive for investment, began to build production facilities, first screwdriver and then full-cycle assembly, we began to humiliate, command, dictate, and change the rules as the game went on. The first brazen demand was made in 2005 under the number 166. It required foreigners to produce 25,000 cars a year. At the same time, we invented production localization (cars had to be at least 30% Russian). Foreigners were patient, so a year later we issued decree No. 566, which required an increase in both production and localization. Decree No. 718 of 2009 changed the rules again.

In the fall of 2010, the requirements became very specific, starting with 300,000 cars per year, motors and gearboxes to be assembled in Russia only, with 60% localization. Ford tried to measure localization honestly and was immediately told off by the Ministry of Industry and Trade - a €5000 fine for each marketable car body. We came to like twisting arms individually so much that in 2010 we suddenly ordered VW and Hyundai to build us a joint factory for the production of automatic transmissions. The Koreans were stunned, but the Germans hastily arranged a meeting between Martin Winterkorn, chairman of VW AG, and Vladimir Putin in September 2010 and repelled the attack, managing to save the Koreans and to protect themselves.

Appreciating the resourcefulness of foreigners, we moved from decrees on industrial assembly to SPICs - special investment contracts, classifying their contents and proceeding to our favorite scenario of individual hostility, backroom deals and illogical benefits.

With the onslaught of Russian ministries, departments and corrupt officials, Russia's investment attractiveness was changing. If in 1995 the country had been ready for opening, there were good prospects and a clear objective, by 2020 the country was better off closed.

Without noticing the war and deceiving ourselves about a worthy partnership, we pretend as if the sanctions in the automobile industry are limited to that segment of the economy, and that the foreigners deeply regret exiting the Russian market. In reality, things look different. We are disgusting, mean, greedy and very stupid partners. Foreigners are fleeing Russia not with regret, but with pleasure. The sanctions were a welcome salvation for them, because otherwise it would have been harder to get rid of the vindictive Russians.

We are disgusting, mean, greedy and very stupid partners

The fairy tale of Russia's immensity, attractiveness, and prospects is over. Closing factories, giving them away for free to anyone who offers to take them, automobile manufacturers write off the whole of Russia as a loss and seek to withdraw to a safe distance. They politely promise to look into the possibility of returning, hoping they will not return to this wild country of bribes, kickbacks, and lawlessness. We habitually interpret their politeness in our favor, deceived by the light on the top deck of the Titanic.

Former partners hope they will not return to this wild country of bribes, kickbacks, and lawlessness

But now it is just as important to deceive the whole country by coming up with a domestic consumption a fairy tale about import substitution and the inheritance that is quite serviceable. The peculiarity of Russia's industrial policy is that we are not «blueprint holders». We have always preferred to take (steal, rip off, buy) someone else's stuff instead of making it ourselves. This is why Russia does not have its own production of bearings, pistons, ABS and ESP units, airbags, fuel equipment and other things. Foreigners have taken the automotive industry with them when they left. And you can't make a car out of nothing. We didn't even consider it necessary to work in a calm environment, and now there's no one to even learn from.

And so, the prioritized automobile industry, created for bragging, narcissism, and bribes, suddenly died. All the factories in the country stood still. Only KAMAZ claims to have continued its creative labor, returning to the 1990 standards keeping its workers busy and its assembly line rolling. The Togliatti automobile plant, which once again reverted to state ownership, has rolled back 50 years, and now its goal is not so much to produce cars as to provide jobs for the workforce.

AvtoVAZ is now headed by the minister Denis Manturov and the government official Maksim Sokolov, neither of them with experience in production or knowledge of the automobile industry. But no one is going to move forward, it is sufficient not to backtrack too much. On the bright side, the most important task of social stabilization of the population will be accomplished with the help from KAMAZ. New models, competition with foreign brands, technologies, and competences are struck from the list of priorities. Workers need factories to go to work in the morning.

Workers need factories to go to work in the morning

Having left Russia in relief, foreigners took away not only the automobile industry, but also maintenance, spare parts supplies, and the notorious logistics corridors. To which we resolutely responded with the usual: fraud, theft and deceit. The fact is that we could have obtained the parts ourselves. But why buy at the old prices if there's a panic in the country? Therefore, with the factories dead and stores empty we played out the old Soviet card: shortage! Spare parts are available, they are still being imported, they have not been sanctioned, and foreign currency is cheap at the moment, but the sellers (private vendors and official dealers) showed solidarity and resolutely ripped off the frightened consumer, threatening to act no less harshly in the future.

The government, having lost the first round involving the automobile industry, has also lost the market of spare parts as expected, because has not been able to arrange for kickbacks, schemes, and bribes quickly enough, and to set the police and the Investigative Committee on isolated shopkeepers. But spare parts are available and are still being supplied. It's just that people must be kept frightened to justify the unprecedented price hikes.

Spare parts are available and are still being supplied. It's just that people must be kept frightened to justify the unprecedented price hikes.

And the beauty of brand-new foreign cars on the streets of big cities will not fade. To a Soviet citizen, the Mercedes was off limits. And to a Soviet leader it was available for foreign currency. Before, after, or during the war. From 1927 to 1940 the Germans supplied to us 56 cars, 85 trucks, 89 car engines. In 1931 we bought 256 trucks under a separate contract. From 1946 to 1969, the Soviet Union bought 604 Mercedes cars, 20 trucks, 7 buses and 14 «Unimogs» for official needs. In 1973, at the peak of the Cold War, we opened an official representative office of Daimler-Benz at 9/10 Prospekt Vernadskogo, Moscow. In 1974 we launched a service station (#7) for Mercedes cars near the Exhibition of Achievements of National Economy. So, we are going back to the socialist way of life, when even rich people could not buy a car. But people in high places or with connections could.

We are going back to the socialist way of life when even rich people could not buy a car

There had always been a secondary market in the USSR. A Soviet person was allowed to own a used car even in 1937. So, government officials will continue to drive in brand-new cars, and we will wait until they bring us a right-hand drive car from Japan or a secondhand one from the Emirates. And until the war is over.

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