Ford Freed From Customs Duties On Car Parts In Russia

Autoparts Report, Oct 18, 2002

Ford Motor Co. said it reached an agreement with Russian customs officials that allows the automaker duty-free entry for imported parts for Focus cars assembled in Russia. Imported parts make up about 80 percent of the Focus models that Ford assembles in Russia.

The so-called "special customs zone", means Ford will only pay tax on the assembled car. "This simplified procedure will definitely give us some financial gain, as it will mean saving time and wages for those who work with documents," Oksana Khartonyuk, spokeswoman at Ford in Moscow said.

She said it was too early to put a figure on the cost savings for the company. Ford became the only foreign company to assemble cars in Russia from imported parts when it launched the $150 million Focus assembly plant in September near St. Petersburg.

Another Russian venture between General Motors Corp. and OAO Avtovaz makes Chevy-Niva sports utility vehicles from parts produced in Russia at the Avtovaz plant. The agreement with Ford is likely to influence other companies to start assembly in Russia.

Renault SA said earlier in September that it would decide by year-end whether to revive assembly of Renault Symbol in Moscow. A Renault Moscow spokesman said then that low customs duties for parts would be a strong influence.

The "special customs zone" is the second regulation by the Russian government to stimulate output of foreign cars in Russia. The government raised import tariffs on older used cars in September.