components
The car components industry brings together manufacturers of a wide variety of products, ranging from seats, chassis members, wheel drives, door handles and glass and plastic parts to finishing gearboxes and making sophisticated electronic components. Today, the list includes satellite navigation systems, mobile communications and multimedia applications. Assembling the modern car requires more than 800 units with over 10,000 parts.
About 2,000 producers currently manufacture car components in Russia. But mostly, they make simple units and components. Experts estimate that technological level of Russian products is about 30-40 years behind their foreign counterparts. Moreover, the quality of Russian products remains poor for the most part. In Europe, the average number of warranty claims per 1,000 vehicles is about 0.002, but in Russia it is 300 times higher at 0.6. The quality of assembly accounts for only 15% of the total number of claims, with the remainder due to the quality of components.
The level of localisation in foreign cars averages 10%. At the Russian assembly plants of foreign car makers, the vast majority of units and assemblies are of foreign origin.
At the end of 2007, the analytical agency Avtostat valued the Russian market for vehicle materials, components and spare parts for cars at USD32.7 billion. Ivan Bonchev, head of Ernst & Young's automotive practice, believes that in 2007, the market for spare parts and components grew by over 20% compared to 2006. In 2008, it is expected to increase by just above 20%. Some analysts believe that the market will grow by approximately 20-25% per annum until 2010.
The market for spare parts and components in Russia is bound to grow. More and more foreign car makers are deciding to build assembly plants in Russia. And the car companies are being accompanied by their traditional suppliers - the global leaders in the production of car components. But the producers of units and assemblies are lagging far behind when seen against the backdrop of rapid growth in the production of foreign cars.
Among foreign manufacturers of car components, the only ones working in Russia are Siemens VDO Automotive Corporation, with plants in Kaluga and Chistopol, the American manufacturer of seats, doors and dashboards Johnson Controls, which produces fillers for the seats, seat covers and assembles seats in Lenoblast for Ford Russia, the German company ZF Friedrichshafen, which is a joint venture with the Russian company KAMAZ, to produce lorry gearboxes, Glaverbel, at the Bor Glassworks and Tenneco Automotive, whose plant makes Tenneco Automotive Volga exhaust systems.
Automotive Lighting is owned by Magnetti Morelli and produces lighting devices for motor vehicles. Factories have opened recently to produce components for the American companies Lear Corporation and Delphi, as well as the French firm Faurecia Interior Systems, which makes bumpers and plastic components for Renault.
Stadco, Toyota Boshoku, Federal Mogul, Autoliv, Thyssen Krupp Automotive, Valeo SA, TRW Automotive and Denso Corporation, as well as traditional suppliers of Toyota, Nissan and Hyundai, have announced plans to build new car component plants. The Volkswagen Group is in negotiations with a number of its regular suppliers to start permanent production sites next to the car assembly plant in Kaluga.
Among Russian manufacturers, few large companies specialise in this segment of manufacturing and mechanical engineering. A large proportion of components on the Russian market is produced by the SOK Group, which makes brake systems, radiators, ball units and heating and lighting equipment for Russian cars.
A significant number of the companies manufacturing components is owned by large Russian car producers such as AvtoVAZ, the GAZ Group, Severstal-Avto and KAMAZ, which are now actively beginning joint production with leading global car makers. These moves are prompted by the unusually strong competition on the Russian car market - one of the most effective ways of maintaining market share is to improve the quality of the cars and meet consumer preferences.
For the time being, western producers prefer to move production of the least complicated car components to Russia: bumpers, mouldings and other plastic items for the interior and exterior, seats and lighting kits. Experts believe this reluctance is due to the low volumes of production at assembly plants. For example, to break even on the production of plastic parts for exteriors, bumpers, seats, exhaust systems, batteries and tires, manufacturers have to produce 200,000 cars a year. But to break even when producing more complex components such as radiators, air conditioning or injection systems, stamped parts, steering components and integrated units (chassis systems, engine parts, suspension systems), production has to exceed 500,000 cars a year.
For Russian Machines, Russia's largest engineering corporation, the car market is one of the highest priorities because it combines modern technology and a culture of production with the market competencies of Russian vehicle manufacturers. Russian Machines is searching for high-tech strategic partners among the leading players in global markets.
