Extensive localization of electronics to be condition of SPIC agreements with Chinese automakers - Russian Industry and Trade Ministry

MOSCOW. Jan 16 (Interfax) - The Russian Industry and Trade Ministry plans to expand the use of domestic auto electronics by Chinese automakers through the inclusion of the relevant conditions in special investment contracts (SPIC, which involve the creation or modernization of modern industrial production facilities with consistent tax conditions and preferences).

A meeting chaired by Deputy Minister of Industry and Trade Vasily Shpak at the AvtoVAZ site in Togliatti discussed the issue of auto electronics localization, the ministry press service said in a statement.

"The main issue was the discussion of the possibilities of introducing extensively localized Russian auto electronics into cars using Chinese platform solutions. During the meeting, a decision was also made to set up a localization schedule among Chinese automakers planning to organize production in Russia," the ministry said.

The ministry, citing Shpak, recalled that the conditions for localization are fixed in special investment contracts, which are concluded by Chinese brands already producing or planning to produce their cars in Russia. Given the increasing share of Chinese manufacturers in the Russian car market, the Industry and Trade Ministry expects to significantly increase demand for domestic auto electronics through additional incentives for the use of localized equipment by Chinese companies.

"Over the past two years, the share of cars on Chinese platforms in Russia has grown significantly. At the same time, localization of these cars in terms of auto electronics is usually limited to the installation of the ERA-GLONASS system. Now the process of transferring domestic electronic control units to their own electronic component base has begun. In order to ensure competitive prices for consumers, we must scale the volumes of the available market. Of course, without that significant market share which is now occupied by cars on Chinese platforms, localization will be less effective," Shpak was cited as saying in the statement.

The ministry also noted that auto electronics today constitute up to 40% of the cost of a car.