By on September 4, 2015

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As the price of oil and gas sinks to below $50/barrell, so does Russia’s economy. The former Soviet state, highly dependant on oil and gas revenues for growth, is expected to experience economic shrinkage between 3.4 and 6 percent this year. That isn’t good if you’re doing business in rubles and some automakers are beating a hasty retreat.

Not Mazda.

Like Ford and Hyundai-Kia, Mazda is sticking it out in Russia with their manufacturing partner Sollers (which is also the manufacturing partner of Ford since 2011). The two have just signed a Memorandum of Understanding to begin assessing a new engine plant in the country.

News of the memorandum comes just a day after Ford and Sollers officially opened their engine plant in Tatarstan, Russia to the tune of $275 million. That plant will build up to 105,000 engines a year for Ford’s Fiesta, Focus and EcoSport models sold within the country.

Mazda’s Russian operation is similar. The current agreement between it and Sollers has seen “around 80,000 Mazda cars” produced in Russia since operations commenced in 2012, according to the automaker. The engine plant would further shield Mazda and Sollers from the volatility of the ruble as imported goods become more and more expensive.

GM is learning the hard way that leaving the country might not have been to its best interest. In addition to giving up global volume to their competitors, the General is now in a fight with the dealers it leaves behind, with some of those dealers demanding more alimony in the separation. If those dealers do plan on turning around and selling cars from other brands in the future, General Motors has — in an indirect manner — paid for other automakers to take their market share in Russia.

The value of the ruble has fallen nearly 50 percent against the U.S. dollar over the 12 months.

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15 Comments on “As Other Automakers Abandon Russia, Mazda Sees Opportunity with Engine Plant...”


  • avatar
    gtemnykh

    Just got back from vacation in Siberia, the silver lining to the ruble collapse is that as a person coming with dollars, man now is the time to visit! I’m actually tempted to buy an older Russian car there to keep in my grandma’s garage for when I come to visit for a few weeks each year. Clean rust-free rwd Ladas and Moskvitch/Izh 412s (those kept in garages during the winter) can be had for $500-1000 all day long, a rougher but running example for $250 or less. I’d have to get it registered and insured under a relative’s name of course. The effect of the sanctions hasn’t really hit the “man on the street” in my family’s part of Siberia (Altai Krai) too badly, unless you were planning on buying a new import. A few more well to do relatives in Novosibirsk were grousing about not being able to get their favorite French cheese anymore, but in rural villages where people never knew of such a cheese and couldn’t afford it anyhow, life goes on as it always has. When you live off the land, growing your own food and getting by with little, global calamities tend to pass you by a lot easier.

    • 0 avatar
      bball40dtw

      Do you fly Aeroflot to Siberia? I assume you would fly into Novosibirsk from Moscow or St Petersburg. Turkish flies there as well though. They seem to be capturing a lot of traffic connecting from west to east.

      • 0 avatar
        gtemnykh

        Yep Aeroflot tickets were $1100 round trip (JFK->Moscow->Novosibirsk), a steal! I assume the ruble/dollar thing is playing a role there. I noticed a lot of Jews flying to Israel (I assume) by way of Moscow as well, so the inexpensive Aeroflot tickets are a real thing. A lot of friends in Novosibirsk had recently gone to or are planning on going to Greece for vacation by way of Istanbul, flying Turkish. They had nothing but super high praise for the level of service on board.

        • 0 avatar
          28-Cars-Later

          That is a steal for halfway around the world.

        • 0 avatar
          bball40dtw

          I like Turkish airlines but I rarely fly that way. $1100 is a great price. My company has paid more to fly me from Detroit to Memphis.

          I haven’t been in Russia in awhile. The last time I went was when American Airlines had $450 RT tickets to Moscow Domodedovo via Chicago (2008). They got burned on that route because Russian customs kept holding their cargo for an extended period of time.

    • 0 avatar
      Onus

      I flew JFK MOSCOW for 26000 – 28000 rubs about $400 on my way home 3 weeks ago after 4 months on transaero. Same on my way in via delta in April. I’ve flown aeroflot, transaero, and delta. Aeroflot is my favorite.

      Sadly I wasn’t working or earning USD while I was there :(.

      • 0 avatar
        28-Cars-Later

        I just spent $600 on a direct flight to Vegas because I hate my money.

        • 0 avatar
          bball40dtw

          PIT-LAS is $600?!?! Daaaaaaaaaaaaaaaaaamn

          • 0 avatar
            28-Cars-Later

            Direct flight on Southwest. The friend I am splitting a room with wanted to arrive the day of the concert and I have to *arrive and be situated* prior to 4PM per the instructions on the backstage packaged I booked. Did you ever see “The Game” with Michael Douglas?

            Additional: New Orleans was $405 with a stop in Charlotte. Enjoy the hub while it lasts.

          • 0 avatar
            bball40dtw

            I have seen “The Game”.

          • 0 avatar
            28-Cars-Later

            I bet its going to be something like that

          • 0 avatar
            highdesertcat

            That’s pricey! It’s $99 (one-way) from PHX, ELP, SLC, DEN, ABQ, LAX, SFO, etc.

            Maybe your market is fair-traded (protected) re all the other carriers.

          • 0 avatar
            28-Cars-Later

            I’m going to blame the county who built a world class airport for US Air in 1994? and then let them skip down. My friend mentioned in a email he was flying out of Latrobe somehow (which is a small airport 40 miles eats) for $250 but I imagine he’s taking multiple flights.

          • 0 avatar
            bball40dtw

            Latrobe has an airport?

            I’ve only been there for Rolling Rock Town Fair. Back when it used to be in Latrobe instead of at Heinz Field. I would like to thank all the Pennsylvanians who provide underage me and my girlfriend with delicious beer and liquor.

  • avatar
    Onus

    This should be a huge boon to Ford and Mazda. A little known fact is that on condition of meeting a certain local percentage of domestic parts the automakers can get a huge break / elimination of tariffs on the other percentage. Building engines locally brings them closer if not to that needed percentage. This should benefit ford the most as they product quite a few models locally.

    I noticed ford just started local production of the fiesta, and the price is actually not bad for once.


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