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KamAZ Mulls over $1.5 Bln Investment through 2012
Russian major truck manufacturer KamAZ is drafting a new development strategy with $1.5 billion investments and a plan to double production in the next five years to 100,000 trucks and enter new markets. The factory is going to become a major player in the heavy truck segment to be able to compete with Scania and Man. In case these plans come true, KamAZ will enter the world top five heavy truck producers in 2012. However, Chinese and Indian producers may be in the way, experts say.
KamAZ may adopt a $1.5 billion development strategy throughout 2012 this summer, several sources close to the factory management told Kommersant. The strategy will see the truck output growing from present 53,000 to 100,000 items and the model range expanding. The plant will also invest in engine modernization to make them meet Euro 4 and Euro 5 standard. All these measures are to help KamAZ boost export and enter new markets in Eastern Europe, South East Asia and India. The plant is going to export trucks there but also create assembling floors. KamAZ Director General Sergey Kogogin confirmed that the plan is drawing up a new strategy but would not specify.
The changes may transform the plant from Russia’s biggest truck producer (32 percent of the market) into a global players “able to compete with Scania and Man in terms of quality and output”, according to Kommersant sources. “With 100,000 items we will become a leader in the heavy trucks segment,” the source in KamAZ said. “Scania produces 65,000 heavy trucks a year, and we will reach the level in 2008. After 2012 our output will be comparable to that of Man which is going to increase production to 120,000.”
KamAZ’s top managers say that the plant is going to use its own funds and loans to finance the plan. Kapital analyst Mikhail Pak says KamAZ’s net operational money flaw rose six-fold, to $250 million in 2006 and said “there will be no problems with financing considering this indicator”. The Interfax news agency reported Wednesday quoting unofficial sources that KamAZ plants to take out a $200 million syndicated loan.
In 2006, DaimlerChrysler-Mitsubishi-Fuso was the leader in heavy trucks production with 430,000 trucks, Volvo-Nissan Diesel were second with 240,000 and Navistar third with 170,000, according to Ernst & Young’s Ivan Bonchev. The analysts said KamAZ with planned 100,000 trucks may soon enter the top 10 in the segment.
Ivan Bonchev says KamAZ should focus on Eastern Europe, South America, Africa and the Middle East in its export expansion. “The South Asian market that the plant is aiming at is highly competitive because of Chinese and Indian producers,” he said. Chinese producers that KamAZ cannot compete against in terms of prices have recently boosted exports to this market, Mr. Bonchev said.
www.kommersant.com
All the Article in Russian as of Jan. 31, 2008
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