AvtoVAZ President Maxim Sokolov spoke during parliamentary sessions in the Federation Council, presenting a clear stance on the use of budget funds for automotive projects that rely on low localization levels. He argued that state support should not be extended to schemes where most components or assembly steps are sourced from outside Russia, as such practices undermine the national supply chain and dilute the potential for domestic technological leadership. Sokolov warned that subsidizing under-localized production could distort the market and hinder the growth of homegrown capabilities, especially in a sector where localization and domestic supplier development are key strategic priorities for the country’s automotive future.
He noted that opening the Russian market to Chinese automakers, if not carefully managed, could adversely affect the demand for Russian-made auto components and hamper the country’s progress toward achieving technological dominance in the automotive industry. In his view, a sudden influx of highly localized production from external players could redraw market dynamics, making it harder for domestic manufacturers to scale and innovate at pace without a deliberate policy framework that protects and nurtures local suppliers while encouraging true localization across the supply chain.
“The problem,” he stated, “is that many manufacturers argue that such under-localized assembly should receive government backing. And this support often comes with terms that look comparable to those offered to fully local producers. We cannot endorse this approach, because it would create an uneven playing field and undermine long-term competitiveness.” He emphasized that policy makers must differentiate between genuine localization efforts and arrangements that merely shift production sites without building domestic capabilities. In his view, fairness in subsidy allocation is essential to preserve the integrity of the industry’s development trajectory and to avoid distorting incentives for investors and manufacturers alike.
If budget funds are earmarked for supporting these kinds of projects, Sokolov warned, the results would likely be a leakage of value abroad. He explained that many of the gains from such investments would end up outside the country, where the key value creation occurs in the production chain. This dynamic, he argued, would not only weaken the domestic market but also deprive Russia of the advanced technologies, skilled jobs, and accumulated know-how that come with a robust local automotive ecosystem. The head of AvtoVAZ stressed that preserving value within the national economy is crucial for sustaining long-term industrial strength and ensuring that Russia can compete on global terms in the years ahead.
“And for some reason,” he added, “these projects tend to migrate outward, especially when Chinese manufacturers expand into our market. They capture a growing share of the pie, challenging Russian automakers and putting at risk the opportunities for local suppliers to thrive.” He called on policymakers to apply rigorous criteria when evaluating potential subsidies, favoring projects that demonstrably increase localization, encourage domestic procurement, and build lasting partnerships with local components manufacturers. His comments underscored a broader commitment to a balanced, competitive, and self-reliant automotive sector that can withstand external shocks while supporting homegrown innovation and employment opportunities.
At the same time, Sokolov expressed openness to the principle of competition and acknowledged that assembling cars with lower levels of localization can still serve as a viable business model when implemented strategically. He argued that market dynamics should not automatically exclude such approaches, provided they contribute to the overall evolution of the industry, allow for gradual upscaling of localization, and align with long-term plans to modernize production capabilities across the country. His stance reflects a nuanced view that values market diversity while prioritizing the growth of domestic know-how and the strengthening of the national automotive ecosystem.
These remarks come in the context of broader discussions about funding and policy direction for Russia’s automotive sector. It was previously disclosed that Sokolov had led AvtoVAZ during periods of financial strain, including concerns about the availability of preferential car loans for gasoline-powered vehicles. The recent statements reiterate a continued focus on maintaining financial prudence, safeguarding public resources, and ensuring that any support measures are aligned with strategic objectives for localization, technology transfer, and long-term competitiveness.