Toyota Anything But Bearish on Russian Market
Executive Summary
In addition to launching RAV4 assembly next year, Toyota plans to increase imports and possibly launch of production of B- and C-segment models targeted mainly at younger Russians.
ST. PETERSBURG – Toyota plans to become one of the leading players in the Russian automotive market, thanks to planned expansion of its local production capacity and the recent departures of competitors, particularly General Motors.
Yoshinori Matsunaga, Toyota executive director-production, says the automaker next year will hire more than 800 workers for its St. Petersburg plant, raising employment there to at least 2,400. Some of the new hires may come from the St. Petersburg plant GM is closing midyear.
Matsunaga adds Toyota plans to increase the capacity of its St. Petersburg plant by up to 100,000 units by year’s end. Production last year was 36,600 units.
Current localization of parts sourcing is about 30%, but that may be increased significantly in coming years.
Toyota in November launched Camry assembly, stamping and plastic-parts production at St. Petersburg.
Next year the automaker plans to start building RAV4 CUVs in Russia, a model expected to be in high demand given the continuing popularity of utility vehicles among local consumers.
The automaker has invested more than RR16 billion ($450 million) in its St. Petersburg facility since 2007, including RR5.4 billion ($110 million) to establish RAV4 production.
Russian Ministry of Industry and Trade data shows that despite devaluation of the ruble and other economic hardships stemming from Western sanctions, demand for SUVs and CUVs is growing. Those vehicles’ share of the Russian market is 40% and is expected to increase over the next several years.
The most popular SUV models in Russia are the Lada 4x4 (22,700 sales year-to-date), Chevrolet Niva (13,500) and Toyota Land Cruiser (6,202).
In addition to launching RAV4 assembly, Toyota plans to increase imports and possibly launch of production of B- and C-segment models targeted mainly at a younger audience.
A spokesman for the industry and trade ministry says Toyota has chosen right time to strengthen its position in Russia, given the difficulties experienced not only by GM but also by competitors still in the market. Nissan, for example, recently announced it was laying off about 360 of the more than 2,000 workers at its St. Petersburg plant.
