MOSCOW (RIA Novosti political commentator Alexander Yurov) - In a bit to overcome a protracted crisis, Moscow-based automobile plant ZIL - the oldest one in Russia - has decided to turn to China for assistance.
With help from major Chinese automobile manufacturer FAW, ZIL will produce buses and 3.5-ton trucks, although so far no big investments are expected.
"The Chinese have named very low prices for their component parts," ZIL Marketing Director Viktor Novachenko said. "But we don't know if they will invest in ZIL's development. So far, the plant is trying to start making Chinese trucks at its own expense, but in future cooperation may become closer. It could be that at the next stage a joint venture will be established."
For the time being, ZIL refuses to say how many automobiles it will assemble under this program. Everything depends on how well the first assembled Chinese trucks, slated to go on the market later this year, will sell. But the plant's management hopes that Chinese trucks and buses will help improve ZIL's financial situation.
According to Novachenko, up to 20,000-30,000 FAW trucks could be sold in Russia a year. But this figure is not final: Sales of the Gazel, Russia's most popular truck, made by fellow Russian carmaker GAZ, are pushing 100,000 a year. However, ZIL has no intention of competing with its Russian rivals. With help from the Chinese, it wants to gain a foothold in the niche between the lower-end GAZ and the more pricey Ford and Mercedes trucks.
ZIL's history dates back to the early 20th century. In 1917, it assembled the Russian version of Italian Fiat trucks from imported components, and a decade later was manufacturing trucks totally from its own parts. Quite soon, these trucks were among the most popular in the country and were extensively exported. But in 1992, ZIL was hit by a protracted crisis that it has yet to overcome.
Now it looks like the good times are coming back. The government has introduced preferential terms for importing components for automobile manufacture for almost the first two years after production of cars in Russia. Only after that will assembly be accompanied by localization of production of component parts, at first by 10%, by another 10% in 18 months, and by 10% more another year later. Now ZIL's management can gradually increase the plant's profitability by using cheap component parts from China.
ZIL has chosen FAW as its partner because the Chinese major has been dominant on its domestic market for many years. But there is another major reason, namely that FAW was built in 1953 with help from ZIL experts. The assembly charts acquired in Russia have been preserved, and the FAW management still includes Russian-speakers. Old-timers at ZIL still regret that in the 1950s the Chinese leadership acquired the promising ZIL-157 truck for assembly in China.
Now it is FAW's turn to share its new models with Russia. But at present it is not a matter of returning original ZIL trucks. Rather, the Moscow plant will manufacture small trucks, licenses for which have been bought by the Chinese from Japan's Isuzu.
However, it is not only the Russians who stand to gain by this cooperation with Chinese automobile manufacturers. It will be of great use to the Chinese car makers as well. Chinese trucks appear totally unprepared for winter, and Russian specialists are now improving these trucks for use in the northern regions of China.
Cooperation between the two automobile companies is not limited to assembly of modernized FAW trucks. A contract is being drawn up to install Chinese diesel engines in Russian trucks. The first such combined automobiles will leave the plant this year.