Carmakers keeping tight watch over Ukraine-Russia dispute

Article by Anita Panait, on March 9, 2014

Top executives at global carmakers are keeping a tight watch over the current territorial row between Russian and Ukraine, which could affect a number of auto markets. "The latest situation is very volatile and we are closely monitoring it," Stephen Odell, Ford Motor Co.'s European chief, said at the Geneva auto show. 

"We won't do anything short term. It's too early to jump to any conclusions." A number of carmakers consider Russia as an important market, selling 2.78 million vehicles in the country in 2013. By comparison, 2.95 million cars were sold in Germany, which is considered Europe's largest market, in 2013. Around 2.26 million vehicles were in the United Kingdom in the same period.

Russia's ambassador to the United Nations, Vitaly Churkin, has quipped that his country's military intervention in Crimea, Ukraine was a legitimate response to a request made by ousted president Viktor Yanukovich. Russian president Vladimir said that Yanukovich, who is an ally of Russia, was still the legitimate leader of Ukraine.

Russia’s moves have received condemnation from the United States and European Union countries like Germany. The situation may also lead to business complications for companies seeking to tap the country’s 140 million consumers. Renault-Nissan is taking control of Russian carmaker AvtoVAZ, the maker of Lada brand models. Renault posted an 11-percent surge in sales in Russia in 2013 to 210,099 vehicles. "In Russia we have a lot of economic and financial interests," Jerome Stoll, Renault's chief performance officer, told reporters.

"Our localization rate is already very high, we are close to 80 percent to 85 percent, so we are not too worried by the devaluation. The main issue is the evolving political situation." In 2013, overall vehicle sales in Russia declined 5.5 percent and the Moscow-based Association of European Businesses was forecasting deliveries to drop to around 2.73 million vehicles this year. [source: automotive news - sub. required]

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