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Low-Income Drivers to Go Chinese
// IRITO to assemble Chinese compact car in Moscow area
IRITO, Russia's largest dealer in Chinese cars, has announced plans to organize the assembly of the Chinese BYD Flyer in the Moscow area. The Ministry of Economic Development and Trade and Ministry of Industry and Energy, anxious to protect the Russian auto industry, have not approved a project to assemble Chinese cars in Russia so far. Kommersant has learned, however, that IRITO's project is likely to receive approval in exchange for the company's promise to make the BYD Flyer a “social car.” IRITO filed an application with the Economics Ministry to receive customs breaks on imported auto components at the end of last month. According to Dmitry Levchenkov, deputy head of the Economics Ministry investment policy department, there are “five or six” other applications for assembly plants for Chinese cars.
The company plans to invest about $40 million to build a new plant in the city of Ramenskoe, outside Moscow, for the assembly of 25,000 BYD Flyers per year. Construction will begin six months after the Economics Ministry and IRITO sign an investment agreement. The BYD Flyer is a five-door car made by the BYD Auto Co. of China. About 1500 of them have been sold in Russia since December 2005. The model to be assembled in Ramenskoe will have four gears and 0.8- and 1.1-liter engines conforming to Euro-2 standards.

The Economics Ministry does not have the last word on customs benefits for assembly production. The ministry's decisions have to be agreed on by the Ministry of Industry and Energy, which sees Chinese cars as a major challenge to the Russian auto industry and which has been accused of stalling on applications for Chinese car production. The Economics Ministry counters that the proposals it receives are often poorly prepared. Kommersant has learned that IRITO has made an informal agreement that the BYD Flyer will be positioned on the market for the lowest-income buyers, a replacement for the Russian Oka, which is no longer produced. Now the least expensive car in Russia is the VAZ-2105, but the BYD Flyer, at $4600, will be cheaper.
Dmitry Belikov; Yury Belov, Novosibirsk
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