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Russian Output Increase May Not Be Wise - Automakers Still Push

The European automotive production sector is crashing down, and it is doing it in a brutal manner. Factories are being closed down, workers sent home, production output is being reduced, automakers are struggling to make ends meet, while still turning a profit and still making cars that people actually want to buy - the balance is very tricky.
Lada Granta Production 1 photo
Russia is planning large scale expansion of its automotive sector, and it plans to do so by building new plants and increasing the output of the existing ones. Now, Avtotor Holding and Magna International are planning on building a complex of fifteen parts-production plants, and six assembly plants, in the Kaliningrad province - their target is 250,000 cars per year, by 2018, for an expected total investment of $3.2-billion.

The Russian automotive market has attracted a lot of attention in recent years, thanks to strong growth, which culminated with the sale of 2.9-million automobiles in 2012. This makes Russia the second largest such market in Europe, being surpassed only by Germany.

However, analysts are not sure if the current steady growth present in Russia will maintain, and if it is actually worth investing a huge sum of money into, in the state it is in now.

Still, the automakers seem to be ignoring these precocious and rather negative predictions, and they are still pushing ahead with their plans. Volkswagen, for instance, is still building its engine plant, next to an already-existing one, in Kaluga, as the Wolfsburg giant plans to sell half-a-million cars in Russia each year by 2018. Even Lada is now making a lot of cars, after refurbishing its Togliatti plant with the ‘help’ of Remault - they now make 350,000 units per year.


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