“Avtotor” began to collect Chinese cars

Kaliningrad “Avtotor“began to produce Chinese Kaiyi cars in the industrial assembly mode,” Vedomosti’s correspondent reports from the assembly site. Production has been established on the conveyor, where Korean cars were previously assembled Hyundai and Kia.

In the modernization of the production line for the production of Chinese cars “Avtotor”invested 100 million rubles, the company specified in a release dated January 30, 2023. The Kaliningrad automaker received the exclusive right to manufacture and distribute Kaiyi cars in Russia and a number of CIS countries. “At the initial stage, the production of the Chinese brand is carried out in the industrial assembly mode based on a welded and painted body. In the future, a transition to a full production cycle is envisaged,” the company reports.

Components for assembly in Kaliningrad, according to Avtotor, come from China through the ports of the Far East and the Trans-Siberian. A variant of providing logistics using a ferry from St. Petersburg has also been worked out.

Kaiyi was founded in 2014 in Sichuan Province as a sub-brand of the Chinese automobile manufacturer Chery. Later it became an independent automaker. 51% of Kaiyi’s shares are held by Sichuan province, the remaining 49% are owned by Chery Automobile.

The first Kaiyi model to hit the assembly line in Kaliningrad was the mid-size E5 sedan. In China, the car is sold under the Cowin Xuandu brand. Under the hood, he has a 1.5 liter petrol turbo engine with a capacity of 147 hp, a gearbox – a manual or a variator. The start of sales of the E5 model is scheduled for the first quarter of this year. The estimated cost of the novelty, according to a Vedomosti source close to the project, will be about 1.5-1.7 million rubles. By the end of 2023, three more brand models are planned to enter the Russian market.

Chery has already tried to independently enter the Russian market with the assembly through Avtotor in 2008-2009. Then in Kaliningrad, in an experimental mode, the screwdriver assembly of brand machines without deep localization began. But Avtotor had to curtail the project. According to unofficial information from sources close to the project participants, the expansion of the Chinese automobile industry in Russia “at that time was extremely cautious about the Ministry of Industry and Trade.” Later, the main owner of Avtotor, Vladimir Shcherbakov, said that with the arrival of other foreign automakers on the Russian market, the position of the authorities in relation to Chinese brands “has become more loyal.”

After the start of the SVO in Ukraine and the subsequent sanctions, most Western, Korean and Japanese automakers left Russia or suspended the production of cars at their facilities in the Russian Federation. Against this backdrop, Chinese car companies stepped up. In particular, the Chinese state-owned automaker BAIC (Beijing Automotive Industry Holding Co.) is negotiating with Avtotor to assemble cars, the parties have reached the point of signing an agreement (Vedomosti wrote about this on November 18). But BAIC was not the only one with whom Avtotor negotiated, the interlocutors of Vedomosti pointed out.

Independent consultant for the automotive industry Sergei Burgazliev believes that at a price of 1.5-1.7 million rubles. and a good configuration “the car will definitely find its buyer.” He added that this is a modern car “with a very attractive interior and a large trunk”, comparable in size to the Skoda Octavia or Hyundai Elantra.

“In the segment of D-class cars is also aiming AvtoVAZ. They plan to launch a car of similar size at the former Nissan plant, of course, they also use badge engineering based on a certain Chinese model,” Burgazliev recalled. But Avtotor’s decision, according to the expert, is strategically absolutely correct and timely.

A huge niche of sedan cars after the departure of Kia Rio, Skoda Rapid, Volkswagen Polo and Hyundai Solaris in Russia is almost empty, said Sergey Tselikov, head of the Avtostat analytical agency. He agrees that the Chinese car will be in demand: “There are a lot of cars involved in car sharing, taxis in this niche, but there is nothing to offer in return,” Tselikov explained. He expects that by the end of the year the ratio in the Russian market of new cars will be as follows: 40% will be occupied by domestic Lada, another 40% by Chinese cars and about 20% by foreign cars delivered through parallel imports. “But not all car owners in Russia will want to drive Chinese cars or Lada. How this ratio will change further depends on the timing of the end of the SVO in Ukraine and the lifting of sanctions,” the expert concluded.

As Vedomosti wrote with reference to data from the Industrial Consulting Passport (PTS), in 2022 the market for new passenger cars in Russia sank by 59% to 626,300 cars. In December 2022, according to the PPC, Russians bought 56,745 cars, which is 58% less than in December 2021. Over 70% of all new cars purchased in the last month of the year came from Russian and Chinese brands.