Car Industry In Russia

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Written Assignment Russian automotive industry and government promotion I.Table of Contents 1.Introduction 1.1The Russian auto industry – short history. 2 . Industry structure. 3. Government initiatives. 3.1 The Concept for Automotive Industry Development 3.2 Free economic zones 3.4 Subsidies for infrastructure, transport upgrades, training and development. 4. Conclusion 5. References 1. Introduction 1. 1 The Russian auto industry –a brief History The Russian automotive industry still has repercussions from the bequest of the Soviet period. At the same time the industry evolved in isolation from taking part in the global auto industry market, in the conditions of a planned and distributive economy.1 Each enterprise had its own niche and did not meet any competition neither on domestic car market nor from foreign producers. The industry was tightly protected from imports. The range of models produced was extremely narrow. In the late 1980s and early 1990s substantial change happened in the automotive industry due to economic and political events. Liberalization of the economy and breakdown of the Soviet Union caused, first of all, sharp decline in output. Diminution in output happened because of general economic slump, a drop in demand, obsolete manufacturing facilities and the fact that the models produced were not what consumers wanted.2 Starting from 1995 the first signs of revitalizing of the Russian automotive industry began to be seen. However, it was obvious that many problems will have to be solved. Those icluded reductions of costs, payment arrears, obsolete technologies and ineffective management. Later in 1998 the market situation has significantly changed due to the devaluation of the ruble. In dollar terms, car prices declined

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