PSA Peugeot-Citroën began rolling out the first pre-series 408 models designed especially for the Russian market at its Kaluga plant in Russia on Monday this week. The initial production precedes full ramp up for mass production at the company’s PCMA facility, which is jointly run with Mitsubishi, later this year.

The latest development will mark a switch from SKD assembly at the facility to full-cycle production including new welding and painting facilities together with a large integration of local suppliers.

The development follows the inauguration last week of a new production line at the Avtovaz factory in Togliatti by the Renault Nissan Alliance. The line, which will initially produce a Lada model, will produce a Nissan model later in 2012 and two Renault models next year, according to the company. The new line raises capacity for Avtovaz, in which the Alliance is planning to take a majority stake, to 945,000 vehicles. Renault Nissan, together with Avtovaz, said that they aim to achieve a combined capacity of 1.6m vehicles a year in Russia by 2016.

These developments are the latest example of how the significant changes that have been made by the Russian government over the last 24 months, together with the resurgence of Russian car sales, are working to encourage the growth of domestic vehicle production in Russia. For example, Russia’s Decree 166, which puts in place favourable import tariffs for carmakers that meet local production and localisation targets, has prompted a flurry of investment by global carmakers in Russia that also includes General Motors, Volkswagen and Ford.

These regulatory advantages are also set to be preserved when the Russian government officially adapts WTO membership later this year.

Russian logistics providers have been responding with full system upgrades in response to the ramp ups in production. Gefco, the PSA-owned provider, has invested considerably in both facilities and trucking assets in Russia, including its own car carrier fleet.

PSA itself has paid specific attention to the selection of component suppliers with a focus on an increase in the level of localisation and the establishment of suppliers in the Kaluga region. However, there remain considerable logistics challenges to production, including long-standing infrastructure deficiencies, a difficult climate and a large geographic spread on the supply base.

Those pressures are also faced by Russia’s indigenous manufacturers, including commercial vehicle and contract carmaker, Gaz Group. “With our growth there is heightened pressure on suppliers and us to be firmer on scheduling and improving inbound logistics,” said company president Bo Andersson in a recent interview with Automotive Logistics magazine.

The growth in the market and domestic production has been across inbound as well as outbound logistics. Providers that had previously relied on subcontracting transport providers are increasingly going in for their own assets, including Germany’s BLG.

“We realise we have to directly invest in this market,” added Uwe Seliger, director for Russia and East Europe at BLG, in a recent article for Finished Vehicle Logistics. “[That means] in ports, inland terminals and transport assets in the whole of Russia, not just Moscow and St Petersburg.”

This is the context in which the 2012 Automotive Logistics Russia conference will be held in Moscow from 19-21 June.

Discussing the challenges ahead at the conference, held this year at the Radisson Royal Hotel, will be senior OEM speakers including Peter Layer, director of global purchasing and supply chain for GM in Russia/CIS, Yury Kotsur, head of logistics for Peugeot and John Stech, CEO of Chrysler Russia.

The two-day event will feature special sessions on finished vehicle logistics, to include speakers like Fumitaka Kawashima, who heads sales, logistics and dealer development for Toyota, and Ford’s director of vehicle logistics, Natalia Petrenko.

Also important, given the particular challenges that Russia’s geography brings to the service parts sector, will be the contribution of speakers such as Renault Russia’s director of spare parts and accessories, Anna Blumkina.

As ever, the role of the customs and the application of import regulations have huge significance in Russia. So the conference will again feature acknowledged expert and government advisor Wilhelmina Shavshina, from law firm DLA Piper, with the latest guidance and predictions.

Infrastructure issues are also near the top of everyone’s concerns. “Russia is very much an open door at the moment and there are many good opportunities,” according to Soren Jensen, country managing director for Wallenius Wilhelmsen Logistics. “The main problem, though, is that growth is outpacing infrastructure and long-term planning is very challenging.”

The conference has simultaneous translation between English and Russian, and the presentations will be made available to attendees to download after the event.

Further information and registration details are available at