MOSCOW (Reuters) -- Ford Motor Co. may export cars from Russia to eastern Europe to offset the Russian market's deep slump.
"Export is something we're looking at," said Mark Ovenden, the head of Ford Sollers, Ford's joint venture. "I would like to look at it beyond a few thousand [vehicles] and see whether there is a more strategic export opportunity for us."
Ford Sollers already exports into former Soviet countries such as Kazakhstan in small volumes, but Ovenden said the company could also target markets in eastern Europe and beyond.
Russia's auto industry is a major casualty of the economic crisis precipitated by the collapse in oil prices and Western sanctions over the Ukraine conflict.
Ford's Russian sales fell 40 percent to 34,077 in the first 11 months in a market down 35 percent to 1.45 million, according to data published today by the Association of European Businesses lobby group.
No upturn in sight
Ovenden said he expected total Russian car sales this year of around 1.5 to 1.6 million units and the same amount next year, well below the 2.5 million units sold in 2014 and the 3.5 million Russian carmakers are capable of producing per year.
"The challenge everyone will face is that when domestic demand is volatile, how do you continue to fill the capacity?" he said in an interview at Ford's offices on the outskirts of Moscow. "That's where I think you need to develop the export capability."
The sales drop has prompted local carmakers to consider exports to minimize losses, or even leave the market, such as Ford's rival General Motors, which has shuttered its St. Petersburg factory and is ending Russian sales of all Opel models and mainstream Chevrolet cars.
Ford builds the Fiesta subcompact and EcoSport small SUV at its factory in Naberezhyne Chelny, according to Automotive News Europe’s European plant map. The automaker also builds the Ford Focus compact and Mondeo midsize models at its St. Petersburg plant.
All of these models except the EcoSport are also built in the European Union. The Ecosport is currently exported to Europe from India.
Ford says it is considering all of the models it builds in Russia for exports, as well as engines made at a $275 million powertrain plant it launched in the Russian republic of Tatarstan this year.
The automaker can produce as many as 350,000 cars a year in Russia and hence has considerable potential to ramp up exports.
Russia-based car manufacturers exported some 80,000 units in the first 10 months, according to customs data, a comparatively small amount. Exports to traditional markets in the former Soviet Union are sharply lower as their economies are suffering too.
While several producers including Volkswagen Group and Nissan Motor Co. have said they could ramp up exports from Russia, they are yet to announce final decisions.
Ovenden said Russia-based carmakers would need continued government support for these plans to come to fruition, however. He said this could take the form of freight support or duty repayments for imported parts that have become more expensive due to the weaker ruble.
Russia's government has said it could provide support measures worth around 50 billion rubles ($726.3 million) for auto producers in 2016, according to recent comments by Deputy Prime Minister Arkady Dvorkovich.
That compares with 2015 measures worth 43 billion rubles.
Automotive News Europe contributed to this report.