Monday, August 18, 2014

Ukraine crisis: Putin’s import ban on cars is an empty threat – THE WORLD

Ukraine crisis: Putin's import ban on cars is an empty threat – THE WORLD

Until now, the economic war between Russia and the West – to put it bluntly – at best a kind of skirmish. Recently Moscow had imposed a ban on imports of agricultural products for sanctions from EU and USA as a result of the Ukraine crisis. This is painful for agriculture, but for Germany probably manageable. The farmers in this country delivered last year just fruit and vegetables in value of 60 million euros.

But now attracts Russian President Vladimir Putin the screws. The next steps would meet alongside the United States in particular Germany, because they are directed against the automobile industry. Russia is considering a partial or complete ban on imports of Western cars. A proposal has already been sent to President Putin, citing the Russian newspaper “Vedomosti” a senior official.

But would it actually an import ban would be in basically an empty threat. Because a large portion of the models that sell Western manufacturers in Russia are produced locally. These cars were not affected by an import ban. The actual problems arising from the attack Putin for the German automotive industry, are quite different.

Russia binds global auto industry closer to him

medium term, but foreign manufacturers would be forced to increase their production in Russia more than it – mandated by regulatory authority – had already do. And therefore it is Putin probably go to more than a further pinprick against the West: Russia’s President is using the crisis to more closely bind the foreign car industry Russia – or from a Western perspective to chain

Russia is so far not a big market for the German automobile manufacturer. 585,800 passenger cars were the producers from Germany sold there last year. That is, given a total of 14 million vehicles produced by the German car industry in 2013 so a manageable number. Russia stands for the Germans ranked only nine of the world’s largest sales territories.

But Russia was considered a growth market and, along with China, Brazil and India as a great hope bringer and future Mega market for automobiles. But now, in addition to Brazil and India not only Russia failed to meet expectations, but slips with the escalation of the Ukraine crisis and the slugfest between the West and Moscow further.

The German auto industry is therefore increasingly a function of the desire to buy the Chinese and U.S. citizens. Because only there the demand for cars grows still significant.

German carmaker respond initially alarmed

No wonder so that the carmaker in view of the situation in Russia and the threat of an import ban react alarmed. However, one must read exactly what can sprinkle Putin’s top officials: It’s about cars Western manufacturers that are produced abroad

This means that after the. current plans, all those models are not affected by the spell, let the foreign companies in Russia run by the band. And that’s a lot. Of all the 2013 cars sold in Russia German brands (which were 585800) imported only 132,400 from Germany.

The rest was built in Russia itself either or came from other countries. The can of course also be subject to the import ban, but for most German manufacturers, the plants in Russia itself are now quite critical to the business site.

would be half of BMW of import ban does not threaten

Example BMW: The Bavarians had sold last year 44,871 cars in Russia. That’s about as much as in Korea. The Russian market is small from BMW’s point of view, but grew strongly last. However, the premium manufacturer did last year, more than 20,000 units in the BMW plant in Königsberg (Kaliningrad) mount. Including the 3 Series, 5 Series and 7 Series as almost the entire X-Series. That is, almost half of the car would not fall under the ban at least for Bayern.

In the GM subsidiary Opel, the situation is similar. For the Rüsselsheim who were so restricted by the parent company, mostly on the European business, Russia to Great Britain and Germany’s most important market.

Everyone check there would have to the long ailing brand fatal consequences. But Opel can produce on a large scale in Russia. 81,400 cars sold the GM-daughter there last year, but including, for example, only 21,000 Astra, which roll off the assembly plant in St. Petersburg.

An empty threat

Also, Volkswagen, Ford, Volkswagen, Renault, Toyota and Hyundai have plants in Russia. That is, they can sell cars from there even after a ban – but the car maker would ensure local capacity ramp up sharply. And that is what Putin wants, among other things.

Already foreign carmaker in Russia are practically compelled to produce on a large scale on site. By law they have to produce at least 300,000 cars in Russia in order to obtain the reduced import duty. Without this import is hardly worth.

So Volkswagen, GM have all its subsidiaries Opel, Hyundai and Renault recently expanded their works vigorously. They would be so equipped to build a large part of the demand of cars in Russia on site. This would be Putin’s import ban on them a largely empty threat.

Much worse, however, is the actual location of the Russian car market. The contracted in 2013 due to the weak economy and devalued the ruble. The Association of the Automotive Industry in Germany now believes that the Russian car market will shrink in 2014 by a total of nine percent. And this evolution paved the automakers in this country more headaches as a possible import ban

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