BMW will use kits delivered from its U.S. plant to boost production this summer of the X4 SUV in Russia with local partner Avtotor based in Kaliningrad. At this plant, BMW already assembles seven models from semi-knockdown kits. When interviewed by Automotive News Europe, a BMW spokesman said that these X4 SUVs built by Avtotor will only be available in Russia.
The spokesman also said that BMW group’s Spartanburg plant in the U.S. will ship the X4 assembly kits to Russia. BMW had recently announced that it had put off deciding on a plan to construct its own plant in Russia due to uncertainty from the financial crisis.
From the start of the year through April, new-car sales in Russia declined by 38% as customers now rarely make large purchases in an economy affected by Western sanctions, dropping oil prices, and a weakening currency.
The Association of European Businesses in Russia shared that BMW brand sales decreased by 20%. Even with the declining market, premium brands have had higher sales than volume marques as rich Russians make investments in hard good during the financial meltdown.
When BMW and Mercedes-Benz have their vehicles locally produced, they are able to avoid paying Russia’s recycling fee imposed on all imported units. Last month, there was a report from Russia media stating that Mercedes-Benz is looking at three sites in Russia for its car plant.
Automotive News Europe has a car plant map revealing that Avtotor assembles the 3-, 5- and 7-series sedans for BMW, along with the X1, X3, X5 and X6 SUVs. In addition, Avtotor makes vehicles for Opel, Chevrolet and Kia.
Because of weakening market conditions, mass-market brands such as Ford Motor and Volkswagen are cutting output at their plants in Russia. Meanwhile, General Motors has decided to suspend operations at its St. Petersburg plant and to terminate sales of all Opel models and mainstream Chevrolet cars.
German industry publication Automobil Produktion reported that IHS Automotive has made a prediction that premium brands with local output will gain from a market recovery. In 2014, Avtotor produced 25,000 vehicles for BMW. IHS forecasts that this year, output will drop to 21,000.