The Drive Toward Localized Automotive Production Amid Global Sanctions
The pressure to reduce dependence on foreign parts has intensified, reaching even the military segment. In the Typhoon military vehicle, built on a KAMAZ platform, numerous components still come from abroad, including a foreign-made gearbox and Michelin tires. A lengthy interview with Deputy Prime Minister Yury Borisov explains how Western sanctions have reshaped the economy and outlines the plans for the automotive sector.
In recent weeks the government has hosted a series of discussions with leading car makers. The central concern is the disruption of supply chains for critical components that stopped arriving at assembly plants, creating a serious challenge for manufacturers and policymakers alike.
Across the industry, foreign content is not evenly distributed, but the automotive sector is undergoing sweeping changes. Companies are establishing new supplier networks, building alternative logistics routes, and tightening plans to keep the industry moving in the foreseeable future. The transition is deliberate, even if that means some temporary bumps in production as the sector restructures.
As Borisov described, the shift may require moving some operations to manual transmissions in places or delaying certain services that are already well-established. Yet these adjustments are framed as temporary, with the expectation that the industry will gradually return to more familiar models and configurations once localized production reaches a stable level.
One example highlighted is KAMAZ, which is pursuing complete localization of the K-5 cabin supply chain. If localization reaches full completion, the company contends that its trucks could surpass traditional European competitors, including Volvo and Mercedes in certain market segments, by offering comparable or superior performance with entirely domestic inputs.
Not everyone
The Deputy Prime Minister acknowledged that the country cannot fully escape the global division of labor. The global economy remains interconnected, and no nation is seeking to unplug from it. However, the world is not limited to the United States or Western Europe; there are other centers of manufacturing power that have not joined the sanctions regime. Among these are the BRICS nations—China, India, and Brazil—and several economies in the Arab world, which are increasingly important to global supply chains. This broader landscape is shaping how Russian industry plans its future, with a focus on resilience and diversification.
A note on the broader context: several markets are watching how localization efforts unfold, as efficiency, cost, and reliability become the deciding factors for long-term competitiveness. The aim is to sustain production while gradually reducing exposure to external shocks, thereby stabilizing the domestic automotive ecosystem and preserving export potential for a wider range of vehicles and components. [Citation: Yury Borisov interview on state strategy and sanctions impact]
A visual note: Depositphotos