| In Ulyanovsk they promise to collect foreign cars, but they don’t say which ones The management of the Severstal-Auto holding, which owns the Ulyanovsk Automobile Plant, yesterday announced its intentions to build a new car assembly plant, where it is planned to assemble both cars already produced by UAZ and foreign-developed cars under license. Thus, Severstal followed the path of Tolyatti AvtoVAZ, which produces Chevy Niva jointly with the American concern GM.
The new site of the Ulyanovsk residents should replace the existing facilities of UAZ, where, as Severstal-Auto admits, the equipment has long been outdated, and the system of organizing production and labor is irrational. The holding reported that the operating capacity of UAZ with all models produced today is allotted a maximum of eight years.
Construction of a new automobile plant, according to Severstal-Auto General Director Vadim Shvetsov, is planned to begin in the second half of 2004 and be completed in two years. The new enterprise will not be built from scratch, representatives of the holding explained to the Vremya Novostei newspaper; it will be created on the basis of one of the workshops of the Ulyanovsk plant. The site where the new equipment will be delivered is currently not actively used.
Consisting of painting, assembly and welding complexes, the assembly enterprise will, however, be included in the Severstal automotive division as a separate legal entity along with UAZ and ZMZ. This is primarily due to the fact that the new project, which will most likely take the form of a joint venture, will involve a foreign partner, from whom both new technologies and financial support are expected. Negotiations to attract a foreign investor (whose name is not disclosed for obvious reasons), according to Mr. Shvetsov, are currently underway.
It is possible that the announcement of plans should push a potential foreign partner to a final decision on cooperation. Let us remind you that Severstal has been negotiating with companies such as Isuzu and Volkswagen for three years now, but so far they have not been successful. Nevertheless, UFG expert Elena Sakhnova considers the Indian companies Mahindra & Mahindra, Tata Motors to be the most likely partners and Japanese Isuzu.
The question of the capacity of the future enterprise is still being clarified, however, Mr. Shvetsov noted yesterday, they should amount to “at least 50 thousand cars per year.” Mr. Shvetsov did not name the estimated cost of the project, saying only that, according to general estimates, the construction of an automobile assembly plant with a capacity of up to 50 thousand cars per year requires $70-150 million. Severstal, referring to the existing UAZ infrastructure, tend to focus on the lower level and believe that most of the project will be financed on their own. For example, it is planned to raise about $51 million through an additional issue of shares in Severstal-Auto (35% of the existing authorized capital). The holding's shareholders are going to consider the issue of additional issue in more detail at a meeting on February 27. However, experts believe that the equipment and assembly line still cost more than $100 million.
Among the UAZ cars, Severstal-Auto considered only the new model of the UAZ-3163 SUV worthy of a new conveyor, which, it seems, is subsequently destined to remain “the only one of the kind” of Ulyanovsk jeeps. “We want the quality of this car to improve and be comparable to the quality of Korean cars,” explains Vadim Shvetsov. Earlier it was reported that the production of UAZ-3163 could be increased to 25 thousand vehicles.
What models of foreign cars will be produced in Ulyanovsk is also not disclosed. It is only known that Severstal’s potential partner is currently producing them. Experts believe that these will be SUVs, since it is more expedient to produce cars on the same base within the same production line. And since foreign models assembled in Ulyanovsk, according to a newspaper source at Severstal-Auto, will cost more than $10 thousand, they will be forced to compete not with domestic cars, but with foreign cars - both imported and Russian-assembled . So the main rival of potential Ulyanovsk foreign cars will be the VAZ Chevy Niva. Yana VIKTOROVA |
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