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| Impact of global economic crisis on Russian car manufacturers |
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The automotive industry is one of the most socially important sectors of the Russian economy. In recent years, the industry has shown phenomenal growth, exceeding the most optimistic forecasts. Several foreign companies established assembly plants in the country. The car retail industry, from almost non-existent, has developed to a vast dealer network that meets Western standards. Significant contribution to such growth was done by a quickly developing system for car loans.
However, the global crisis has had a major impact. The world's largest car manufacturers had to seek help from their governments and Russia is not an exception. Russian manufacturers are forced to reduce its cost base with car sales expected to fall by twenty-five to fifty percent in 2009. The Russian market is affected by difficulties with financing car purchases, high interest rates charged on car loans, rising unemployment and decreasing disposal income.
In response to this, the government has been taking measures to support car manufactures, including customs measures and subsidies to regions for automobile purchases with 20bn rubles, of which 10bn rubles being additionally provided by regional budgets. There is also a possibility of the automakers’ tax debt being postponed from 2009–2015 to 2011–2017. In general, there is an intention to allocate up to 70bn rubles to finance the current activities of companies as stated in the anti-crisis programme.
Despite global concerns about the impact of the economic recession, the Russian market has the same long-term potential as it had before the crisis. It is obvious that today it is more important than ever for automotive industry companies to place greater emphasis on internal business processes and weather the crisis with minimal losses while taking advantage of all the opportunities presented by the market.
Through SMBC group’s relationships in the Japanese automotive sector and extensive lending to the sector worldwide, the bank is in a prime position to assist in the expansion of the automotive sector both OEMs and parts manufacturers. Similarly, we can bring long-term, low-cost funding to SMEs through our agency of JBIC/NEXI financings. Recently, SMBC group has provided credit facilities to a number of automotive industry customers in Russia.
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