The PSMA Russian plant began car production through the Automobile Technologies company, established in March 2023. The operation imports components, rents production space from PSMA Rus, and a portion of the work is completed by plant staff under contract.
Mid sized crossovers are assembled using large unit assembly technology (SKD4 from the 800 component group). Bodies arrive in Russia already welded and painted, but the vehicles are not yet assembled there. Kits reach the country by rail from China.
A production line was put into operation at PSMA Rus; glass is affixed to bare bodies, wiring harnesses are installed, and internal elements and components are assembled on the line.
A small number of cars from the combined pilot batch will not be released for free sale. The team will focus on quality control and addressing deficiencies likely to appear since the plant has not produced cars for nearly two years.
Automotive Technologies is currently pursuing certification for the car that entered the production line. A full Vehicle Type Approval will be issued for transit, and once that is received it may enable consideration of removing the model from the list of vehicles allowed for parallel imports.
The company views the simplified procedure in government decree No. 855 as unsuitable for importing vehicle kits, since the decree cannot be extended beyond its validity.
Simplified cars
The government decree, On the approval of the Rules for the implementation of mandatory requirements for certain wheeled vehicles and the assessment of their conformity, was adopted in May 2022 and has been amended several times since. It allowed automakers to produce cars with a reduced environmental class without airbags in Russia and to certify them in a simplified manner. The current version remains valid until February 1, 2024.
Why a crossover?
The team at Automotive Technologies explains the choice of a mid sized crossover for resuming production because certification for this category proceeds more quickly than for other models.
Restarting highly localized models from the prior lineup proved impractical due to the need to redevelop, test, and implement components, especially electronic parts that could not be used under sanctions.
Mass production of the crossover is planned to begin in March, with sales expected to start in March to April of 2024. The anticipated price is around 4 million rubles, assuming stable external conditions such as the ruble exchange rate and the Central Bank key rate. In the next stage, the welding and painting lines are to be integrated into production, which would occur if demand grows and output needs to rise. PSMA Rus also plans to begin production of another similarly sized SUV in spring 2024, with future aims to restart engine manufacturing and resume commercial vehicle production.
The factory was idle
The return to car production at the PSMA Russian plant is likely driven by local authorities, with a strong likelihood that commercial vehicles will be assembled in Kaluga to meet market demand. Independent automotive industry adviser Sergei Burgazliev noted increased competition in the mid-size crossover segment and explained that the market is crying out for efficient delivery vans or larger commercial vehicles in the style of the Fiat Scudo. He added that the PSMA plant has prior experience building such cars and understands the necessary process, though competing with a flood of Chinese models in this class remains challenging.
According to Burgazliev, there are almost no light delivery vehicles in China that can serve as donors. At the same time, components from Peugeot Partner or Fiat Doblo Panorama from earlier generations were produced for different markets, making it possible to assemble a kit and sell it to Russia via a Chinese partner. Burgazliev emphasized that the option exists, but buyers should temper expectations given global supply and price dynamics.
Maxim Kadakov, editor in chief of Za Rulem, stressed the significant need for light commercial vehicles in the Russian market and noted that corporate customers face price pressures that are as strong as those facing private buyers. He pointed out that the company had few faster options and that the main goal would be to sell a large number of crossovers since their production is straightforward. Kadakov added that the ability to produce more popular passenger cars and light commercial vehicles will depend on the reception of the PSMA plant’s restart by markets in the West and in China. He cautioned that a 4 million ruble price point is high for many consumers. For passenger cars, demand in Russia exists in the 1.5 to 2 million ruble segment, though penetrating that niche is very challenging. He suggested that commercial delivery vehicles, ambulances, and passenger vans could be more viable, and their prices may normalize over time.” (Source: industry interviews)