Ford Strengthens Manufacturing Base in Russia

VIENNA – Last week’s launch of complete-knocked-down Kuga assembly in Russia, coupled with previously announced plans to add the Edge and EcoSport CUV production in 2014, signal the growing importance to Ford of both the market and its local joint venture.

“We have very ambitious plans to grow our operation here,” Executive Chairman Bill Ford said during last week’s ceremonial launch of the Kuga CUV at the Ford Sollers joint venture plant in Elabuga, Tatarstan. “In a very short period of time we have grown from two vehicles to eight vehicles to next year 10 vehicles (built in Russia).”

The CKD operation represents a step up in Kuga production at the plant, which previously assembled the vehicle from semi-knocked-down kits. It also is an indicator of the growing role envisioned for the JV operations in the Republic of Tatarstan.

Originally Ford built Focus and Mondeo models at its plant in Vsevolozhsk near St. Petersburg in northwest Russia.

Following creation of the JV with Sollers in 2011, assembly of Ford vehicles started at Sollers’ former plant in Elabuga. There currently are six models assembled there, including the Kuga and Explorer built from CKD kits and Galaxy, S-Max, Tourneo Custom and Transit, assembled from SKD kits.

While Elabuga will add Edge SKD assembly early next year, the announcement of the EcoSport CKD output in Naberezhnye Chelny, Tatarstan, in 2014 means Ford Sollers will launch operations at the second former Sollers factory the Russian partner brought into the JV and its third vehicle plant in the country overall.

“We are looking forward to launching our plant in Naberezhnye Chelny next year, which will further strengthen not only our success in the market but also the Russian auto industry,” Adil Shirinov, Ford Sollers executive director and chief operating officer, says in a statement.

The Naberezhnye Chelny plant, originally known as ZMA, was established by the heavy-truck manufacturer Kamaz to produce Oka minicars in 1980s. Production of the Oka started in 1987.

In 2005, the factory was bought by Severstal-Avto, which later became Sollers. Prior to the creation of the JV with Ford, Sollers assembled Fiat cars at the facility.

The company employs 2,000 workers in Tatarstan, but that count will rise to 2,500 by year’s end.

In addition to the two vehicle operations, Ford Sollers is building a new $274 million engine plant in Tatarstan which will start production in 2015.

Ford also is luring foreign suppliers to the area. Among them is Coskunöz, a Turkish manufacturer of stamped parts, assemblies and tools, which will supply Ford Sollers from a new site in Tatarstan.

“Russia is critically important for the Ford brand,” Bill Ford says in a statement. “In a market where around one-in-three vehicles sold is an SUV, it is important for Ford to have a strong presence with a full portfolio of SUVs that provide customers the highest levels of quality, safety and technology to suit their needs.”

While Ford soon will offer four locally made CUVs to Russian customers, the situation at the other end of the brand’s portfolio remains unclear.

Ford phased out sales of the Fiesta hatchback earlier this year and, in contrast to other European markets or to the U.S., its smallest car available in Russia now is the Focus. Only 970 Fiestas were sold in the market in 2012, compared with 1,532 units a year earlier.

Ford reportedly may re-launch the Fiesta in Russia with the sedan model, and it is possible the car will be built locally. Some suppliers say they are negotiating with Ford about local production of Fiesta parts.

In earlier interviews Ford executives told WardsAuto the automaker is considering production of a B-segment car in Russia, but there has been no official confirmation.

In addition to manufacturing activities, Ford Sollers recently announced the creation of a research and development center in Russia. The R&D activities will be based in three locations expected to employ 150 people by the end of 2014.

The Moscow office will be responsible for localization, technical support for suppliers, programs for development and production launch of new vehicles, testing, homologation and the coordination of all R&D functions.

The division in Tatarstan will develop special versions of commercial vehicles, and the office in the St. Petersburg region will oversee production and quality.

Ford sold 77,474 cars and light-commercial vehicles in Russia through September, down 19.2% from like-2012. The brand ranks No.9 in light-vehicle sales in the market.