\nvehicle companies pulled out of vehicle manufacturing in Russia, as political pressure
\nhit and sanctions bit. Renault had to walk away from its many years of
\ninvestment in AvtoVAZ. Technically, it has a right to re-purchase its stake in
\nthe company although that seems unlikely. Nissan sold its factory to a local
\ncompany, as did Hyundai. A Russian investor bought the Mercedes van<\/a> factory
\nnear Moscow and for a while produced Chery cars from kits under licence.
\nVolkswagen<\/a>, Toyota, GM, Ford and Stellantis went down similar paths or just
\nshut down their plants entirely. Chinese kit assembly grew, but imports
\nmushroomed.<\/p>\n
Chinese OEMs fill void left by other carmaker withdrawals\u00a0<\/p>\n
<\/p>\n Great Wall Motor eyes 300,000-unit European plant by 2029<\/p>\n \n Great Wall Motor is exploring its first European plant, likely in Spain or Hungary, aiming for 300,000 vehicles a year by 2029 to revive its regional sales.\n<\/p>\n Ilkhan Ozsevim<\/p>\n <\/a><\/p>\n As Chinese companies increased shipments into Russia, to fill a void and meet While Chery decided that involving itself in Russia is not worth the sanctions risk and reputational damage with international investors, Great Wall is taking the opposing view…<\/p>\n However, as well as being pressured by the Russian government While Chery decided that involving itself in Russia is not worth <\/p>\n Inside Palmela: How VW transformed a 30-year-old factory for net zero<\/p>\n \n From geothermal networks to electrified paintshops and closed-loop metal recycling, Volkswagen’s Palmela plant demonstrates how legacy factories can achieve significant decarbonisation\u2014while confronting hard truths about polymer contamination and circularity limits.\n<\/p>\n Ilkhan Ozsevim<\/p>\n <\/a><\/p>\n A multi-brand factory, called AMMKZ, has recently begun producing models from Changan and Great Wall and a plant, called Allur, is due to produce vehicles from Soueast which is a Chery brand<\/p>\n Other Central Asia countries offer production opportunities\u00a0<\/p>\n Geely meanwhile has stayed out of producing vehicles in Russia but has a joint Geely is building a factory in Almaty in Kazakhstan which Kia is the biggest recent non-Chinese investor, having invested While Russia remains an economic pariah and an investment risk, the Chinese especially, and Hyundai-Kia too, have no qualms it would seem about investing in central Asia<\/p>\n Partnering with local producers<\/p>\n <\/p>\n China\u2019s automotive industry: Global expansion and transformation<\/p>\n \n China has moved from national champion to global force in vehicle manufacturing, exports, and electric mobility. Overcapacity at home, rapid development cycles, battery dominance, and fast-rising overseas investment are driving a profound shift in the industry.\n<\/p>\n <\/a><\/p>\n Meanwhile in nearby Uzbekistan, where Chevrolet was also once While Russia remains an economic pariah and an investment<\/p>\n
\ndemand, Chery, Great Wall, Geely and Changan quickly replaced international brands
\nin positions 2 to 5 in the Russian sales rankings, Lada remaining supreme at
\nnumber 1. By the end of 2024, Chinese brands had secured 60% of the Russian market.
\nWhile this took place largely untrammelled to begin with, the Russian government soon indicated however
\nthat it wanted automotive production to take place in Russia, partly to stop the
\nflight of capital abroad as imports surged. <\/p>\n
\nto boost investment in Russia, to make more cars, or at least increase the
\nlocal content of imported kits, Chinese companies began to face a different pressure
\nfrom another direction. Chery, for example, which is seeking a listing on the
\nHong Kong stock exchange, came under pressure to reduce its activity in Russia
\nin order to attract international investors. Exiting the country, Chery cited
\nadditional import fees which Russia has levied as a further reason to reduce its
\nsales activity and any manufacturing investment in the country. Co-incidentally
\nChery has also stopped assembling in Iran and Cuba to avoid potential sanctions
\nfrom the international community<\/p>\n
\nthe sanctions risk and reputational damage with international investors, Great
\nWall is taking the opposing view. Great Wall avoids additional import duties (described
\nas a one-off advance recycling fee) because it has a full manufacturing plant
\nat Tula, south of Moscow. This plant made over 130,000 vehicles last year and
\nhas an exemption from local taxes until 2028. Output is due to rise to 200,000
\nper year and the company is also producing vehicles from CKD kits in another facility
\nin the interim.<\/p>\n<\/p>\n
\nventure in Belarus which allows it to ship vehicles into Russia without
\nadditional import fees; whether this will be retained in the longer term as
\nGeely expands with its own brands into Europe remains to be seen. And as the
\nChinese cool on investing in Russia, they are looking at two neighbouring countries
\nwith growth potential and from which exports into Russia \u2013 which remains an important
\nmarket \u2013 appear to be safe from sanctions, for now at least.<\/p>\n
\nwill start production in 2027, making the Coolray crossover and Emgrand sedan.
\nThis will add to the country\u2019s existing production by Hyundai<\/a>, Kia, Chevrolet
\nand the Chinese brands Jetour and JAC. A multi-brand factory, called AMMKZ, has
\nrecently begun producing models from Changan and Great Wall and a plant, called
\nAllur, is due to produce vehicles from Soueast which is a Chery brand. <\/p>\n
\nUS$310m in a new plant in Kostanay, which has an initial capacity of 70,000 units
\na year; it started production with the Sorento and will soon add the Sportage.
\nAlongside the well-established Chevrolet Onix and Cobalt, the Kia models are
\nexpected to be highest volume vehicles made in Kazakhstan. Officially, domestic
\ndemand and surrounding central Asian countries are the target markets but the border
\nwith Russia is notoriously porous and it is likely that many Kazakh-made
\nvehicles will end up in Russia, any official sanctions notwithstanding.<\/p>\n
\nthe dominant brand courtesy of a local manufacturing joint venture, Chinese
\nbrands are becoming increasingly common. BYD<\/a> recent imports success has been facilitated
\nby establishing a local assembly operation, with 50,000 units annual capacity initially.
\nSome press reports have suggested that capacity there could be raised to half a
\nmillion a year; it would be unwise to bet against BYD achieving this volume in
\nthe next decade or so given its growth profile elsewhere. BYD moreover is not
\nthe only Chinese company planning to produce in Uzbekistan, with Great Wall having
\nrecently started kit assembly there; full manufacturing is likely to follow.
\nMeanwhile two local companies \u2013 Runking Motor and Central Asia Motors \u2013 will
\nproduce Changan models in the near future.<\/p>\n
\nrisk, the Chinese especially, and Hyundai-Kia too, have no qualms it would seem
\nabout investing in central Asia; Kazakhstan and Uzbekistan may currently be minnows
\nin terms of overall volumes but as their governments set up import barriers,
\nwith tariffs and duties, investment in local production is the only way for
\nwould-be entrants to go. Watch this space.<\/p>\n