Russia: Import Substitution and Trains,Planes and Automobiles

By Rhod Mackenzie
Since 2022 Russia has embarked on a major programme of import substitution to replace their dependency on western technology and equipment, lets look at how that is going in trains,planes and automobiles.

Towards the end of 2023, Russian Railways initiated the inaugural journey of the new Finist train. The former Lastochka, a train produced in Russia in collaboration with the German company Siemens, has been rebranded as the Finist. This is just one of a number of instances since 2023 where Russian manufacturers have been able to produce their own mechanical engineering models independently, rather than relying on foreign suppliers.
The sanctions imposed on Russia by the collective West were designed to impede Russia's technological advancement. The most significant impact was felt in the most advanced industries, including transport, machine tool manufacturing, electronics and the oil sector.
A significant number of leading global manufacturers, who possessed the most advanced technologies and supplied essential components, chose to withdraw from Russia.

At the Future Technologies Forum in July 2023, Vladimir Putin stated: "We are facing pressure to relinquish our sovereignty and our right to chart our own course in history. This is being done by restricting access to technology." The President highlighted the importance of focusing efforts on critical areas for the country's development, where it is essential to possess in-house competencies. "It is also essential to develop the entire technological and production chain, including our own equipment, components, software, and, of course, people and personnel, in addition to scientific developments and basic solutions."

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These tasks are relevant not only to the high-tech sector, but also to any industries where dependence on foreign supplies is unacceptable. In the autumn of 2022, the government established a dedicated team to oversee a series of import substitution projects, which started implementation in 2023.
A total of 162 government import substitution projects are currently being implemented in Russia across a range of sectors, including chemical and forestry industries, ferrous metallurgy, machine tool building and heavy engineering, automotive and aviation industries, railway engineering and others. The total investment in these projects amounts to 5.2 trillion rubles ( $that is $52 billion dollars so you can se thay are serious)
It should be noted that this figure does not include corporate projects that are being implemented by companies without attracting budget financing.
Of these areas, four stand out as particularly noteworthy examples implemented in 2023. In particular, in the field of transport, which is critical for such a vast country as Russia. These examples demonstrate how Russian industry, which previously relied on foreign suppliers, has been able to produce final samples of key serial products independently following their departure.

Cars and trucks
In 2021, domestic passenger cars (Lada and UAZ) held a mere 22% share of the Russian market. Concurrently, the proportion of imported vehicles assembled in Russia was approximately 60%, with slightly over 18% imported. Up until 2022, AvtoVAZ, a domestic Russian manufacturer, was under the ownership of the Renault Group, with a 67.61% stake. The French had a significant influence beyond mere shareholding and managerial appointments. They played a pivotal role in the development of new Lada models, which were created on their global platforms and assembled using components sourced from across the globe.

Upon exiting Russia, Renault transferred its shares in AvtoVAZ to the Scientific Research Automobile and Automotive Engine Institute (NAMI) for a nominal fee of one ruble. The new management of the enterprise was tasked with returning to independent production. However, this was not feasible for all models. Consequently, production of the Lada Xray was halted due to the unavailability of essential auto components.
The company's efforts were focused on localising another model, the Lada Vesta NG. The task was completed within a year. On 3 March 2023, the first locally assembled Ladas were produced. In total, approximately 600 components were replaced, including the engine management system, mirrors, glass, wires, lighting devices, steering system, and so on. These were replaced with domestic components. The vehicle has been localised to the extent of 85%. The other parts coming from a variety of countries

Consequently, the proportion of Lada vehicles sold in the domestic market during the first nine months of 2023 reached 37%. The Lada Vesta NG has become one of the most popular new products on the Russian car market. The Ministry of Industry and Trade announced that AvtoVAZ conclude 2023 without losses and will produce a record number of Lada cars over the past decade, with an expected output of over 374 thousand units.

Russia's largest truck manufacturer, KamAZ, faced similar challenges. The supply of components and parts from unfriendly countries was disrupted.

However, the situation in Naberezhnye Chelny was managed in such a way that the conveyor was kept operational. At the outset, the automobile manufacturers drew upon existing inventory to address the component issues, which were subsequently resolved with minimal delay.

The objective was to substitute imports and identify new suppliers from friendly countries, with the primary focus being the flagship model of the KamAZ-5490 mainline tractor (K5 platform). The initial development and manufacturing process was originally undertaken in collaboration with a Western technology partner, the German Daimler AG. The first tractor with new 'sanction-resistant' components was assembled in February 2023.
The automatic transmission, drive axle, pneumatic system and other units were replaced, with a total of over two thousand components being identified for localisation. In addition, a number of technical characteristics of the vehicle were enhanced. The localisation rate for the vehicle has reached 70%. KAMAZ plans to significantly increase production of the K5 model in 2024, and there are all the prerequisites for this: the capacity of the Russian truck market is growing at a record pace.

High-speed trains
For many years, the German company Siemens has been the most important partner of Russian manufacturers of railway transport. The Sapsan and Lastochka trains, the most modern and technically advanced electric trains of Russian Railways, were created and launched on the line on the basis of the developments that the jpoint venture company had made.

However, despite Siemens' withdrawal from Russia, production of the Lastochka continued in Russia. In a short time frame, a new, import-substituting version of the train was created, initially designated ES104.

Spare parts are now supplied by enterprises from across Russia. The floor and windows originate from St. Petersburg, the ceiling and entrance doors are sourced from Moscow, the diode panel is supplied by Yekaterinburg, the luggage racks are produced in Krasnoyarsk, and the seats are manufactured in Novorossiysk. The new train features a new traction drive, on-board computer, and air conditioning system, all of which are manufactured in Russia.
The former Lastochka has been rebranded as Finist. On 28 November 2023, Russian Railways received the first two trains, which had reached a localisation level of 95%.
On 28 December, the first fully import-substituted analogue of the Lastochka electric train, named Finist, commenced its maiden voyage on the Sverdlovsk Railway (SvZhD), on the route from Yekaterinburg to Kamensk-Uralsky. A total of eight Finists have been delivered to SvZhD, with a further four expected before the end of the year.

Passenger Airliners
The Sukhoi Superjet 100 (SSJ100) was initially developed as a project with broad international cooperation, with the expectation of sales on the global market. Despite the challenges, the project was a success. The SSJ100 currently accounts for a significant portion of both domestic and international routes.

It has long been recognised by the Russian aviation industry that there is a critical dependence on foreign components. For instance, in 2019, the delivery of Superjets to Iran was hindered due to the US Treasury Department's refusal to issue the necessary permits for the export of several components present in the aircraft. Following the events of February 2022, it appeared that the future of the aircraft was uncertain.

However, the foundations laid several years ago proved to be effective. In a remarkable feat, the United Aircraft Corporation developed an aircraft, the SJ-100, that is almost entirely import-substituting, in record time. Approximately 40 systems and units were replaced in the aircraft. The aircraft completed its inaugural flight in August 2023.
The new aircraft are currently still equipped with the most important foreign-made element, the SaM146 aircraft engine, created with the participation of the French company Safran. This accounts for the description of the situation as being "almost completely". However, the Russian analogue, the PD-8 engine, is currently undergoing final testing.

The SJ-100, which will be equipped with a new Russian engine, is scheduled to make its first flight in latey 2024. The final localisation level of the serial SSJ New will be 97%, with serial production scheduled to commence in 2024. It is anticipated that 142 aircraft of this model will be produced by 2030.

So there you have in trains,planes and automobiles Russia is standing on it own and confounding the west. Import substitution is succeeding in every area it is being tried in.,