17.3.2005

The SOK Group places its bet on establishing strategic alliances with foreign producers

On 17 March General Director of the SOK Group Alexander Solovyov presented a report to the 8th annual forum «Russia's Automotive Industry» organised by the Adam Smith International Institute in Moscow. The audience of leading national and international carmakers heard Alexander Solovyov's presentation of the first achievements in implementing the strategy for development of the SOK Group and its members.

Riding the market trends, the SOK Group developed in 2004 a strategy for developing its proprietary production facilities through 2010, the strategy’s key provision being expansion of cooperation with foreign producers. Possible strategic partnerships promise to be rewarding in view of such factors as high growth rate of the Russian automotive market through increasing imports of new motor vehicles and sales of foreign brand cars of domestic manufacture coupled with favourable economic forecasts, and strong market positions of the SOK Group.

Alexander Solovyov said in his address that about 65% of the increase in sales of foreign make cars in 2004 was in the price range of $10-17 thousand. The strategy adopted providing for the SOK Group to focus its efforts in this segment, IzhAvto OJSC, a member of the Group, started implementation of the project to produce the Korean model KIA Spectra. Full-scale production of the car in Izhevsk will start on 1 August 2005, with the project expected to deliver 40 thousand motor cars a year.

 Alexander Solovyov also said that in March 2005 the SOK Group was granted the status of authorised distributor of the KIA Motors corporate group in Russia. According to expert forecasts, the 2005 sales of foreign-made cars will increase by 40%. The anticipated sales of KIA cars are estimated at about 25 000 units.

As a KIA Motors Corp. distributor, the SOK Group intends to develop a long-term strategy to strengthen the position of the KIA brand in the market of the Russian Federation. According to Solovyov, this will result not only in increased sales of imported motor vehicles, but also in lower financial risks involved in distributing the KIA Spectra cars made at the Izhevsky carworks.

The SOK Group also pays a great deal of attention in its strategy to production of car parts. The SOK Group is currently the leading supplier of components to Russian businesses, including to foreign model makers such as FORD-Vsevolozsk and GM-Avtovaz carworks. The group is exploring the prospects of setting up alliances with major foreign producers of components.

Alexander Solovyov said that the development strategy adopted by the SOK Group has proved to be right. The strategy, incorporating as it does certain corrections found necessary in the constantly changing external and internal environment, makes it possible for the Group to maintain its course towards the objects in view, retain its position as Russia's leading producer of car parts, and expand into the international market in the nearest future.

Presentation to the report by A.M.  Solovyov at the conference «Russia's Automotive Industry»
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