2020-10-23 AEB Committee Presentation.Pdf
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68/70 Butyrsky Val, bld.1 Mobile app: Follow us on: 127055 Moscow, Russia Tel.: +7 (495) 234 27 64 www.aebrus.ru Contents 1. AEB Automotive Components Committee 1.1 What we do 1.2 Committee facts and figures 2. Russia Overview 3. Position Paper 4. Contacts What is the AEB? • The Association of European Businesses (AEB) is an independent, non-commercial organization which represents foreign investors in Russian and is the biggest of its kind. • The AEB was founded in 1995 on the initiative of a number of European companies that operated in Russia, Ambassadors of EU member countries and the head of the European Commission’s Representative Office in Russia. • The AEB is an active community of more than 500 members from the member states of the EU, the European Free Trade Association (EFTA) and other countries, which have business activities with and in Russia. • The AEB is an advocate of its members’ opinion, generated in over 65 industrial and cross-sectoral committees, subcommittees and working groups. 3 What is the AEB Automotive Components Committee? Mission: Be one voice that creates and supports a sound investment climate and operating environment for the automotive components and supplier industries Effective communication with governmental bodies Consolidate key suppliers to boost cooperation and work out ideas that would benefit the industry Promote the Committee as the best place to discuss ideas, address concerns and make proposals to support the industry Member companies: Aptiv, Atlas Copco, Benteler Automotive, Continental Automotive Systems RUS, Dow Europe, Dupont, Faurecia, Gestamp, Johnson Matthey, Robert Bosch, ISG support-GUS GmbH, Russian Automotive Components, SAF-Holland RUS, Segula Technologies Russia, Volvo Vostok Automotive Consultants members: Deloitte, DLA Piper, EY, KPMG, PwC 4 What do we do 1. Regular committee meetings (sometimes with invited experts) 2. Official communication with government bodies: letters, meetings, participation in working groups. 3. Round tables (i.e. Euro 6 round table) 4. Alignment with other automotive committees (Commercial vehicles, Automobile Manufacturers Committee) 5. Networking 6. Events (IMAF, TIAF, …) 5 Committee Facts and Figures Around 70% of the value added of the car is created by suppliers Traditions Founded in 2000 Independence The committee is funded by membership fees only 24 € 2 bln 9000 Plants Sales/year People employed 6 Russia Overview – GDP per capita, PPP 7 Russia Overview – Russia getting more stable sanctions 8 Russia Overview – Export from Russia in 2018 ($450bn) 9 Russia Overview – Russian car fleet needs replacement Age of cars, in years 10 Russia Overview – Car Ownership Still Low Number of cars per 1000 people by countries in 2015 11 Russia Overview – Main OEMs in Russia Russia Overview – Foreign Suppliers (Brands) Source: www.napinfo.ru 13 Russia Overview – Foreign Suppliers (Products) Source: www.napinfo.ru 14 Sales by Brand, units sold 3 500 000 3 000 000 2 500 000 2 000 000 1 500 000 1 000 000 500 000 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 Avtovaz (Lada) Renault Nissan Hyundai Kia VW Group GM Toyota Ford GAZ PSA Others 15 Russian Market Share Distribution by OEM 100% 90% 18% 18% 20% 20% 19% 18% 18% 17% 18% 80% 4% 3% 4% 3% 3% 4% 3% 3% 3% 7% 7% 70% 7% 8% 7% 5% 6% 6% 7% 2% 1% 4% 2% 2% 12% 60% 13% 13% 9% 8% 11% 12% 10% 11% 11% 50% 9% 11% 11% 10% 10% 11% 13% 13% 6% 8% 40% 7% 6% 10% 6% 10% 10% 10% 10% 6% 7% 7% 30% 5% 5% 5% 5% 4% 6% 6% 7% 8% 6% 8% 8% 9% 8% 20% 6% 8% 8% 8% 10% 22% 20% 21% 18% 17% 16% 17% 19% 20% 0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 Avtovaz (Lada) Renault Nissan Hyundai Kia VW Group GM Toyota Ford GAZ PSA Others 16 Jan-Sep Car Sales Contracted by 13.9% 300 000 1 200 000 250 000 1 000 000 200 000 800 000 150 000 600 000 100 000 400 000 50 000 200 000 0 0 Jan Feb Mar Apr May Jun Jul Aug Sept Jan-Sep 2019 2020 • Total Russian PC + LCV market (sales of cars) in 2019 was 1.8 million vehicles. • 85% of cars are locally produced 17 Russian Automotive Strategy 2025 ❑ Increase localization of components ❑ Export 8% of production ❑ Improve emission requirements ❑ harmonize technical requirements and standards with worldwide approach ❑ improve power efficiency ❑ Electric vehicles, 5% by ‘25 ❑ Autonomous driving, 2% by ‘25 ❑ Smart safety and management systems ❑ Mass reduction (new materials) ❑ Smart and adaptive production technologies, advanced technologies for developing new products ❑ Alternative fuels (CNG), 5% by ‘25 ❑ Recycling 18 Russia Overview – Emission and Future Mobility ❑ LV market is dominated by foreign brands, CV by local ones. Historically Russia was following Europe in terms of emission legislation (as a signer of the Geneva Agreement) but with a lag of about 5 years. We expect this to continue. ❑ Customers are more and more concerned about air quality. Low emission zones are legally introduced, first LEZ will be in place in 2021 in several regions across the country, mostly in resorts and cities like Moscow and St Petersburg. ❑ As of today no plan to ban ICE completely. KAMAZ and GAZ are developing diesel engines for Euro 6 with Liebherr and AVL. ❑ No hybrids. ❑ CNG strongly supported by the government. CV > 5% by 2025 - we are confident this will be reached. ❑ Hydrogen under discussion – may well be the dark horse. OEMs like GAZ and KAMAZ are researching this technology. ❑ Electric share of 5% by 2025. Today’s problem: limited infrastructure in place, high price and competition with CNG. Electric buses are produced in hundreds locally (by GAZ, KAMAZ and Volgabus). ❑ We are confident Russia will invest into emission reduction. We think all three (CNG, Electric and Hydrogen) will have their share as in most parts of the world. Due to the usual lag of about 5 years vs the EU a long term strategy similar to the EU one might come up in the next years. 19 Russia Overview – Emission legislation 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Euro 4 Euro 5 (LV + LCV) Euro 6* Euro IV Euro V (CV) Euro VI* * The exact target date for new emission regulation not set yet • Euro 5 is in place in Russia for all type of vehicles (LV & CV) • Euro 6 implementation date in Russia not defined yet. Russia pushes for it, needs to align with members of the Customs Union (Belarus, Armenia, Kazakhstan, Kyrgyzstan). • Decree 832 legally introduced Low Emission zone in cities, they will be applied from 2021 in resorts and cities (Moscow, St Petersburg, Crimea…) 20 Russia Overview – Electric, Hydrogen or Methane? Russia is choosing between electric, hydrogen or CNG/LNG (methane), the latter being now the biggest favourite. Electric – Electric passenger car sales are extremely low (around 353 new vehicles in 2019). No local production. – Electric buses are bought in hundreds by cities, most are produced by local OEMs (GAZ, KAMAZ and Volgabus). Hydrogen – Russia used to be a pioneer in Hydrogen field with cars, space ships and airplanes powered by hydrogen. Non- automotive hydrogen applications (drones) are in serial production. Domestic research teams/labs have all technologies available from fuel cells to membranes and tanks. – Technical regulation is in place and is synchronized with global standards (Russia teams up with ISO/TC 197 and IEC/TC 105). – In 2019 the Ministry of Industry and Trade for the first time expressed its interest in Hydrogen vehicles. CNG – Russia has the biggest methane reserves in the world (about 25% of world’s reserves). – CNG offers better emissions and lower costs. (CNG is 3 times cheaper v gasoline in Russia) – Several vehicles are already in serial production. Total fleet today around 150K veh., 700k planned by 2030. – Biggest problem is insufficient number of CNG stations on the roads (380 today, 2400 planned by 2030). – Russia has a Government Strategy to develop CNG. First step was in 2014, second one started in 2019. 21 How used the Government to support the car industry? In the early years of 00’s Russia was recovering from the fall of the Soviet Union. Many industries were completely wiped out, some were on life support. The government decided to pick several high-tech industries, among them the automotive industry, to give them a boost. The government with the help of BCG created a strategy – the so-called industrial assembly regime (Decree 166) – which basically meant OEMs paid reduced or zero import duties for components in exchange for localization. 2005 - First wave of 166 Decree, passenger cars only. To comply with the rules one had to establish capacities for 25K volumes/year and 30% localization. Ford, Renault and other OEMs launched first plants. First suppliers of bulky parts localized. 2011 - Second wave: 166 Decree 2.0. Rules were restricted and international OEMs (VW, Ford, Renault-Nissan) agreed to them: capacity of 350K units/year, 60% local content (Decree 166). Similar support was introduced for suppliers (Decree 566). The agreements were set to expire in 2019-2020. Apart from low import duties the government supported the industry with special programmes to support demand, with subsidies to compensate different types of costs and to support introduction of new technologies. At some point in time the automotive industry used to be the must subsidized in Russia. This highest level of support is supposed to phase out slowly. In early 2019 as the industry was facing the expiration of previous agreements and as the overall economic conditions have changed the government decided to go for step 3 – a points system (Special Investment Contracts+ Decree 661/719).