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Businessman Zufar Ismagilov has swapped tractors for Fords, and is hoping to strike it lucky – thanks to Tatarstan’s unique position at the center of Russia’s biggest automotive industry cluster.

Ismagilov, a former agricultural entrepreneur, has set up a joint venture with his Italian partners to manufacture new combined polymer-wood interior trims for Fords.

He’s taking advantage of a government policy that requires 60 percent of foreign auto manufacturers’ car parts, including engines, to be produced locally by 2020.

“There will be 200,000 Fords – including Focus-3, Transit and off-road vehicles – assembled here every year,” Ismagilov said, explaining his business plan on the sidelines of a business summit last month in Kazan. “And the niche of new interior trim hasn’t been occupied yet.”

Today Tatarstan finds itself smack bang in the center of a huge automotive cluster, which has been developed in the Volga Federal District. The cluster includes Nizhny Novgorod, Tolyatti, Alabuga and Izhevsk. Thus Tatartsan enjoys logistical and infrastructural advantages, as it’s also close to large chemical enterprises in Ufa, Kazan and Nizhnekamsk. Ismagilov said he saw a chance to cash in on this advantage and built his factory in the outskirts of Kazan.

“I can take polypropylene from Ufa, make the trims in Kazan and bring ready products to Ford’s factory in Yelabuga, which is just 200 kilometers away,” he said.

His joint venture received a lowcost loan of 6 million euros, backed up by an Italian government export guarantee. Manufacturers who work in the Alabuga get extra support in the form of a VAT-exempt and duty-free regime for components produced there.

Andrei Toptun, an analyst at the Autostat agency, which researches trends in the Russian auto industry, said that Alabuga’s geographical advantage was only part of the story. “It also takes goodwill from the local authorities and suitable infrastructure,” he said.

Ismagilov said that after he presented his business plan to local authorities in Tatarstan, they fasttracked his application to purchase land within three months – a process that usually takes at least half a year.

However, it’s not all downhill for local firms like Ismagilov’s. Local car parts manufacturers have tough competition from big international names. Giants such as Magna, Bosch, Continental and Michelin were the first foreign firms to get Russian ISO certificates.

Andrei Rozhkov, auto analyst at Metropol financial group, agreed that well-established foreign companies would take the lead in car parts manufacture, but “there will be large-scale cooperation with Russian auto parts manufacturers.”

A venture such as Ismagilov’s, where the Italian partner has only a 45 per cent stake, is currently the exception rather than the rule, Rozhkov said. “Foreign companies are more likely to create joint ventures with more than 50 per cent control from their side,” Rozhkov said.

Ismagilov has high hopes for his business, since he has already struck a deal with AvtoVAZ to start a production line making polymer-wood interiors for the Russian firm’s vast, Soviet-era plant in Tolyatti.

“Lada is 25 per cent of the market, and if new imported technologies and components will be used to make it, this is to customers’ benefit,” Rozhkov said. Experts predict that some 2.2 million cars will be made or assembled in Russia this year, with an average price of $20,000. Out of that potential total of $44 billion in revenue, the auto parts market could be worth $14 billion, or 30 percent of the market, experts say

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