The implementation of economic sanctions by the U.S. and other Western countries against certain individual Russians—oddly enough including one of Putin’s opponents—prompted Russian legislators to propose retaliation, including a proposed law would allow Moscow to seize Western companies’ and individuals’ property and accounts in the event of sanctions imposed by the West.
While it’s safe to assume that Russian troops occupying Crimea are unlikely to withdraw, especially after the sham 95-percent-for-Russia referendum and Putin’s recognition of Crimea as an “independent” country that just happens to have Russian troops in the streets, there remains the question of what foreign assets the Russians might take over.
Western automakers have increased investment and operations in Russia since the breakup of the Soviet Union in anticipation of a growing market in that country, and although the native Lada remains the top brand in Russia, the next three are Hyundai, Chevrolet and Renault.
GM Auto, which makes the Chevrolet Cruze and Opel Astra in St. Petersburg, also has a joint venture with AvtoVAZ, the parent company of the Lada brand, to produce the Chevrolet Niva, a compact SUV.
Ford has a 50/50 joint venture with Sollers, a Russian company, to build the Mondeo and Focus at the Ford-Sollers assembly plant in St. Petersburg.
Renault builds five different models in Russia, including the Logan, which it claims to be the top-selling three-box sedan in the country. The French company also has a joint venture with AvtoVAZ, with a 900,000 unit capacity, along with a Nissan plant in St. Petersburg.
Volkswagen completed its 600,000th vehicle at the company’s Rus plant, now building the Volkswagen Polo and Tiguan and Škoda Fabia and Škoda Rapid.
Toyota has been building Camrys in Russia but is developing plans to build the RAV4 there. Toyota claims it’s the fourth-largest seller in the SUV market in Russia.
Hyundai claims the fastest growing brand in Russia, along with the largest assembly plant, to make the Hyundai Accent, sold locally as the Solaris.
Kia instead of Russia chose Slovakia for its first manufacturing plant in Europe. Kias are assembled from “semi-knocked down” kits, however, by Avtotov, a specialist “car assembler,” as distinct from “manufacturer.” The SKD kits contain all the parts needed to assemble a product, which are manufactured in one location and shipped together to another site for final assembly, often used to avoid tariffs which are erected to provide local employment. Avtotov has put together SKD kits (plus some CKD, or completely knocked down, kits) for BMW, Cadillac, Chevrolet and Opel, in addition to Kia. Autotov recently signed a joint venture with Magna International, probably the biggest company you’ve never heard of in the automobile manufacturing business, to increase Autotov’s capacity.
If things go sour, perhaps the luckiest car company is the one that hasn’t been able to establish a foothold in Mother Russia. Although the Fiat 124 sedan was the basis of the infamous Lada, the post-Soviet era hasn’t seen a Fiat manufacturing incursion in Russia. An agreement between Fiat and Mosavtozil, a joint venture between Russia’s Sberbank and the city of Moscow, to assemble the Ducato van (a model that will be sold here as the Ram ProMaster) in the first quarter of 2014 fell through, as did another to build Jeeps, had not the Taganrog Automobile Plant gone bankrupt.
It’s been said that no two countries with McDonald’s have ever gone to war with each other—and there are McDonald’s in Kiev, Crimea and in Moscow, the largest (naturally) in the world. It’s symbolic, of course, of global economic interdependence. But in Crimea, Putin has delivered the West with a fait accompli. Ukraine doesn’t have the muscle to eject the Russian troops, and no one else has the will. Actual shooting, if any, would be by proxies of the larger countries.
Whether Putin can bully international corporations like he can Russia’s smaller neighbors is another matter. Carmakers have spent millions of rubles to add manufacturing plants in recent years, and additional investment is planned. But then, bullies don’t always behave rationally.
“We’re watching the situation very closely,” GM president Dan Amman told Automotive News recently. “It’s a big market for us.”
And it’s a big risk, in more ways than one.