Russia Car Industry

The second is given in case. In file named image four to image 8 u had sent to me Ans 3 Future of Russian Car industry Russia has potential to become a major automotive base for the export of vehicles and components to the rest of the world. The future of Russian Car industry is attractive as the industry is having following strengths. * Russia has amole supplies of many of the world's most value natural resources, especially those required to support a modern industrial economy. * Well educated labor force with sound technical expertise * The companies can produce part at low cost. * The domestic manufacturer has large developed network.

Weakness The foreign as well as domestic manufacturer has to suffer because of the following weaknesses of industry. * Foreign companies with Joint Venture (JV) in Russia see several obstacle in investing automotive sector of Russia. They are facing the following obstacle. O Contradictory Legislation O Lack of low enforcement O Widespread corruption O An unpredictable political environment O Barter Transaction in the OEM ( Original Equipment Manufacturer) market. * Russian Federal Legislation does not provide any specific Tax or Import duty relief to foreign investors manufacturing automotive components * Local ( Domestic). When life gets better, people start buying automobiles.

Russia is no exception to the general rule that in emerging markets, every one per cent increase in Gross Domestic Product results in at least a two per cent hike in car sales. Auto sales in Russia rose by 35 per cent in 2007 over 2006, while GDP increased by less than a quarter of that – 8.1 per cent. In 2007 the Russian market moved from the fifth-largest passenger car market in Europe into third place, behind Germany and Italy, and is expected to be Europe's largest market in the near future.

International manufacturer will come with innovative range of cars:- As the international manufacturer spends more money on R &D than the domestic manufacturer. The international manufacturer spends 5% of their total revenue on R& D. The domestic manufacturer spends less than 1% of revenue on R&D. 5 Force Porter Model