MOSCOW, July 4 / TASS/. American automaker Ford continues to search for buyers for its Russian assets; German, South Korean and Chinese companies may become bidders, but the sale price is unlikely to be high, that is what the experts polled by TASS said on Thursday.
Ford is in commercial negotiations to sell its Russian assets and is currently considering proposals for the acquisition of factories from interested companies, the Ford Sollers press service told TASS. Currently, Ford automobile plants in Naberezhnye Chelny and Vsevolozhsk, as well as an engine manufacturing plant in Elabuga, are in the process of being closed. Its production lines have been closed since late June. "The closure of the plant is a complex and time-consuming process, which includes the preservation of the building and equipment, data archiving and other necessary actions," explained Ford Sollers.
As previously reported by the Minister of Industry and Trade Denis Manturov, Ford will put the closing plants up for auction. Experts believe that, given the difficult situation in the car market, "there won't be a line of applicants lining up to purchase the factories," and among the participants are likely to be Chinese companies.
Possible buyers
Hyundai and Volkswagen have been repeatedly called among the main contenders for the purchase of Ford plants. According to experts, these companies are most interested in expanding their capacities in the Russian market. "Ford’s factories may be of interest to Hyundai and Volkswagen due to good logistics, availability of the component base and qualified workforce at Ford’s factories," says Sergey Suverov, a senior analyst at BKS Premier.
However, Hyundai is not the only South Korean company that can take part in the auction. According to the VTB Capital analyst Vladimir Bespalov, among the applicants may also be the company Kia. "From my point of view, most likely, it will be either Koreans – Hyundai and Kia, which may consider the possibility of expanding their own capacities in Russia. The second option is Volkswagen, which now has a contract assembly at the facilities of GAZ Group. I do not exclude the possibility that they are also considering expanding their own capacities through the acquisition of Ford factories, "he said.
At the same time, experts unanimously believe that participation of the German company BMW, is unlikely. "As far as I understand, BMW has frozen the negotiations of its own plant and is now engaged in an investment contract with Avtotor," said partner of the analytical agency Avtostat, Igor Morzharetto. "For now, they looked more at Kaliningrad and the automotive cluster that exists there," Bespalov explained.
Chinese company interests
Many experts note the interest in the Russian market of Chinese automakers, so perhaps Haval and GAC companies will appear among the bidders. "Chinese companies will certainly be there, because a dozen and a half Chinese companies are now working in our market. Sales are not large, but Haval took the first step, which opened a plant in the Tula region, a large plant, and here a number of companies came up. As far as I know, Chery has a very large project in Kaliningrad. Other companies also look at our market as the most promising, so someone else from China probably will take part," Morzharetto said.
At the same time, Aton senior analyst Mikhail Ganelin noted "the GAC has expressed interest in Ford assets." The interest of Chinese companies is also noticed by Maxim Khudalov, director of the corporate ratings group at ACRA. "We believe that the Chinese machine builders will be interested in the power in Elabuga, especially the site for the production of engines," he said.
Asset price
The Russian car market is an alarming situation, automakers say. According to the Association of European Businesses, sales of passenger cars and light commercial vehicles in Russia in May fell by 7% compared with May 2018. The AEB noted that this is the maximum decline in the market over the past two years. Experts believe that this may affect the selling price of closing plants. "Ford’s withdrawal from Russia shows how difficult the situation is in the automotive industry and, of course, the cost of factories will be low. Initially, Ford was not at all sure that it would find buyers for its assets. But still, yes, there are some interested parties, but it’s unlikely whether there will be too many," says Ganelin.
According to Khudalov, "the cost of the plants will not exceed 3-4 billion rubles."