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DARPA awards Phase 2 SBIR contract for HEV motorcycle prototype
January 20, 2015 By Neville -
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January 20, 2015 By Neville -
Nissan LEAF is best-selling EV in Europe for fourth year in a row
January 20, 2015 By Neville -
Ford of Europe designer Stefan Lamm joins VW’s Seat brand
January 20, 2015 By Sean -
Ford’s German production to raise as demand rebounds
January 20, 2015 By Sean
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Russia’s ruble collapse hits Asian carmakers’ ambitions
Asian carmakers, which bet big on expanding in Russia, face a test of their commitment to a market they once hoped was set to surpass Germany’s by size as the ruble plunges and auto sales skid.
Manufacturers including Japan’s Nissan, China’s Great Wall and South Korea’s Hyundai and its Kia affiliate have been stepping up investment in Russia in recent years and are gaining market share in the country at the expense of European and U.S. rivals.
But the ruble’s sharp fall this week on tumbling oil prices, which brought its losses against the dollar this year to about 50 percent, leaves their near-term prospects there looking decidedly bleak.
China’s Geely Automobile, whose parent Zhejiang Geely Holding Group owns Swedish brand Volvo, warned on Tuesday that its profit this year would roughly be halved, partly as a result of foreign exchange losses in Russia.
Geely, whose Russian sales have slumped 49 percent in the first 11 months of 2014, said it was raising prices in the country and had begun “to restructure its Russian operations with an aim to reduce its financial risks.”
Even before the ruble’s recent slide, Russian car sales were forecast to drop 15 percent this year and a further 4 percent next year, according to Hyundai and Kia’s in-house think tank, which expects overall Russian sales this year of 2.37 million, compared with 3.25 million in Germany.
That slowdown comes just as some producers are scaling up.
In August, Great Wall, China’s biggest SUV maker, broke ground on a 3.2 billion yuan ($517 million) car factory in Russia, its first, which will have annual capacity of 150,000 cars.
The company said Tuesday that those plans remain intact despite the market turmoil.
Last week, Japan’s Nissan began producing its X-Trail model at its plant in St. Petersburg, where it is doubling capacity to 100,000 vehicles per year in a bid to increase the share of locally made cars it sells in Russia to 90 percent by 2016, from 70 percent now.
While they can take comfort from the fact the ruble’s fall gives comparative advantage to carmakers with higher levels of localized production and content, a tottering Russian economy hurts the entire industry.
France’s Renault, which is the biggest player in the market through its control of top local carmaker AutoVAZ, benefits from having the highest share of ruble-denominated costs for the cars it produces there, at 90 percent, followed by the Hyundai/Kia pairing, at 68 percent, according to a Nomura report.
Japanese manufacturers generally import a bigger share of their cars into Russia, the report said, although the weaker yen has helped Nissan and Toyota post sales gains this year in Russia.
Kia, which along with Hyundai holds a combined 15 percent of the Russian car market, good for second place, has been diverting some of the cars it usually imports to Russia from plants in Slovakia and South Korea to other markets to avoid selling them at a loss, a company official said.
“We are trying to minimize losses by redirecting vehicles to other European countries,” the Kia official said, declining to be identified or give further details.
To offset the pain of a tumbling ruble, Kia also raised prices on key models in both the second and third quarters, according to a company official.
Hyundai invested $500 million to build a plant near St. Petersburg in 2010 that it shares with Kia and is running at full speed. It said Tuesday it has no plans to expand capacity in the country for now.
Hyundai and Kia’s Russia sales fell 2 percent and 4 percent, respectively from January through November, compared with the market’s 12 percent decline.
“The more we sell in Russia, the more we lose money there,” another Kia official told Reuters recently on condition of anonymity because he was not authorized to speak to the media.