“Isuzu Sollers” leaves the SPIC – Newspaper Kommersant No. 195 (7396) dated 10/20/2022

The parity joint venture Sollers and the Japanese Isuzu received government approval to terminate the special investment contract (SPIC). In fact, the company never fulfilled its obligations: for example, a UAZ car based on an Isuzu chassis was supposed to go into production in 2021. At the same time, the parties owe nothing to the state, since they did not use benefits. Although the abandonment of the SPIC and, probably, the subsequent exit of Isuzu from the joint venture was discussed even before the crisis, now the continuation of the work of the Japanese company in the Russian Federation is questionable in principle due to logistical problems and restrictions on the supply of trucks by Japan.

On October 18, the Interdepartmental Commission for Special Investment Contracts considered an application to terminate the SPIC of Isuzu Sollers LLC, a parity joint venture between Sollers and Isuzu. Isuzu Rus and the Ministry of Industry and Trade confirmed to Kommersant that during the meeting a decision was made to terminate the SPIC. Sollers did not comment on this.

The contract concluded in 2018 was one of the first in the automotive industry and assumed, among other things, the launch of a joint product of Isuzu and Sollers, UAZ City, on the market in 2021, which never happened.

The total investment in the project was to amount to 4.96 billion rubles. At the end of 2021, the head of Isuzu Rus, Fabrice Gorlier in an interview with Kommersant said that “the main idea was to create a highly localized product jointly with UAZ” based on the Isuzu chassis. He also spoke about plans to revise the contract: “The current SPIC mechanism has no practical meaning for us.” This happened due to the revision by the government of the rules for compensation of waste collection in 2019: until that moment they were guaranteed in the event of a SPIC, and after that they began to depend on the level of localization. In addition to UAZ City, the contract also included obligations to localize large vehicle components, which came into force in 2023 (for example, localization of the engine).

Historically, Isuzu Rus was also a joint venture between Sollers and Isuzu. But in 2016, Sollers sold its 50% stake in this company to the Japanese side, as a result of which the share of Isuzu Motors Limited increased to 74%, and another Japanese company Sojitz Corporation – up to 26%.

Sergey Udalov from Avtostat notes that now the situation for exiting obligations and partnerships is easier than a year earlier.

Sollers, like its Japanese partners, has hardly been betting on UAZ City lately. At the same time, it is clear that even in a relatively good market in recent years, Isuzu has not been able to increase sales and the level of localization, and now this is “all the more unrealistic,” he said.

Sources of Kommersant in the automotive industry say that formally, upon termination of the SPIC, the company must return all the benefits received from the state. Fabrice Gorlier said in 2021 that the joint venture did not receive compensation for salvage fees. However, preferences within the framework of the SPIC itself imply benefits, for example, on taxes. Isuzu Rus told Kommersant that they did not use benefits, the Ministry of Industry and Trade confirmed this.

After the termination of the SPIC, the joint venture may be liquidated.

Thus, Fabrice Gorlier said that its existence “depends on the availability of a SPIC, because we created the joint venture directly for this instrument.” “This legal entity has no other functions. We produce and sell exactly as JSC Isuzu Rus, Sollers does not apply to sales,” he explained.

The Isuzu plant in Ulyanovsk has been operating since 2012. In 2021, 3.7 thousand vehicles were produced at the site with a capacity of 5 thousand units. The release on the site has been suspended since the spring of 2022. The lineup of Isuzu commercial vehicles included chassis with a gross weight of 3.5 tons to 33 tons, as well as D-Max pickups. According to the AEB, in January-September Isuzu sold 531 passenger cars and light commercial vehicles, which is only 8% less than a year earlier. A week earlier, Isuzu said the distributor had assembled chassis and complete vehicles in stock, ready to ship and sell to both dealers and end customers.

Sergei Udalov believes that Isuzu, like other foreign automakers in the Russian Federation, is unlikely to have certainty about the prospects for resuming production: at least the problems of supplying components remain significant. As a result, this can really call into question the fate of the plant in the Russian Federation. Japanese media reported that Isuzu was considering discontinuing production, but the company did not confirm this. However, direct import, taking into account the restrictions imposed on the export of trucks from Japan to the Russian Federation, is also hardly possible.

Olga Nikitina