Russia requires a service sector transformation amidst WTO membership
GAZ Expands Horizons as Russia's Automotive Industry Adapts to WTO
In August 2016, the Russian automotive industry joined the World Trade Organisation (WTO), marking a significant step towards international trade and competition. One of the key players in this sector, GAZ, is now considering expanding its business-to-business services.
GAZ, a renowned Russian Original Equipment Manufacturer (OEM), is contemplating acting as a distributor for new OEMs, potentially including Chinese companies. The company's extensive sales network for vehicles and spare parts could be offered to new OEMs looking for a distributor in Russia.
The WTO membership is expected to push companies like GAZ to improve services, including logistics, to better hold onto customers and improve their competitive advantage. GAZ's president, Bo Andersson, believes that there could be opportunities for the company in the logistics sector.
In a bid to streamline its inbound logistics, GAZ is planning to move a large share of material within eight hours of the factory using its own assets. The company aims to handle 500 truckloads per day of imported materials at the factory to assemble vehicles by the next year.
GAZ has also partnered with Bosal to build exhaust systems. The company's spare part availability is said to be the best in the country.
The impact of WTO membership on new passenger cars will be relatively mild in the medium term. However, for certain segments, such as Light Commercial Vehicles (LCVs), the impact is more significant, with duties dropping from 25% to 15% upon accession.
The Russian industrial policy for the automotive industry is often protectionist. However, WTO membership will help simplify trade practices and put pressure on reducing corruption.
The expansion of services by GAZ, such as distribution and logistics, could be a response to increased competition in the Russian automotive industry. GAZ is open to the possibility of offering logistics services to its contract manufacturing clients beyond customs clearance and in-plant logistics.
The 'recycling tax' is a proposed measure to cover vehicle disposal and would be applicable to new and used imports. This tax is designed to replace import duties and protect the domestic market.
The WTO membership should give consumers more choice in the Russian automotive market. Renault Nissan is expected to gain majority control of Avtovaz, and General Motors (GM) and Volkswagen (VW) are investing at least $1 billion in Russia by 2018.
However, it's important to note that no specific companies have been named that invested at least one million dollars in Russia by 2018 and entered into a cooperation with GAZ to produce vehicles there.
If the Russian government implements a recycling charge and requirement, GAZ could potentially become a "professional scrapper". This would involve the company managing the disposal and recycling of end-of-life vehicles.
In conclusion, the Russian automotive industry is undergoing significant changes as it adapts to the WTO. Companies like GAZ are responding by expanding their services and seeking new partnerships to remain competitive in this evolving market.
Read also:
- Understanding Hemorrhagic Gastroenteritis: Key Facts
- Trump's Policies: Tariffs, AI, Surveillance, and Possible Martial Law
- Expanded Community Health Involvement by CK Birla Hospitals, Jaipur, Maintained Through Consistent Outreach Programs Across Rajasthan
- Abdominal Fat Accumulation: Causes and Strategies for Reduction
