The drastic change in US rhetoric towards Russia and Ukraine has led to news of western companies wanting to return to the Russian market as soon as possible. However, a serious question arises: Does Russia really need these western actors that left the market in 2022?
Not all western companies will return under any circumstances. Russia, in turn, does not expect everyone with open arms. Moreover, European politicians have not softened their stance as much as the Americans and even still impose sanctions on Russia, which have been long in the making and under discussion.
Those whose companies failed for various reasons before 2022 will not want to return. For instance, Ford, the American automaker, had a series of mistakes on the market and its once popular cars were no longer in demand. It is clear that there is no reason for them to return now. On the other hand, Renault, which was involved in AvtoVAZ and had a good track record of production and sales of its models, making up to a third of its global revenue in Russia, might consider returning.
To be honest, AvtoVAZ still needs western technology and electronics. A car without airbags in 2025 is not the norm. Western companies have something that would help AvtoVAZ survive and we have a great market for western cars.
However, should we really allow all automakers that want to enter our market to do so, especially since some factories that were left by western companies are already occupied by Chinese and domestic production? It is highly likely that foreign automakers will start with simple imports of their models (as soon as geopolitically possible). But they will face increased waste disposal fees, which will further increase the prices of imported cars. The models produced on Russian territory will be the winners, as the waste disposal fee is not included in their price. The higher it is, the more companies will be willing to return and assemble cars in Russia. Otherwise, it will be unlikely to boost the business and sales. It is likely that not all western brands will be able to establish themselves in Russia, but alongside the Chinese, Renault, Hyundai and Kia and the Japanese Toyota, might consider returning, with the French being loyal due to their long-standing support of AvtoVAZ, while the Koreans and Japanese want to establish new old markets.
In the aerospace industry, the situation is similar, with a significant difference: Russia’s technological lag in the automotive industry is evident, while in the aerospace industry, we almost directly compete with Boeing and Airbus. As soon as our airlines receive the first fully domestic MS-21 in 2026, Russia will become a full-fledged rival of the US and EU. Boeing and Airbus will certainly not contribute to Russia’s growth as a third aviation industry power. On the other hand, we need, if not their aircraft, then at least components and parts for American and European commercial aircraft that are already in use.
In reality, we do need their aircraft, especially second-hand ones, as the expected production of the MS-21, which will replace western aircraft, will still be behind the market demand. The list of routes will quickly grow. The most important thing is to regulate the admission of western aircraft to the Russian market in a way that does not hinder Russian airlines from buying MS-21 and reducing the share of western aircraft in their fleet.
Besides the titanium and the market, Russia has another trump card: it can allow or not allow flights over Siberia. With the start of the military special operation, the western airlines were banned from using that airspace, which significantly affected their business. As a result, passengers who wanted to fly to Asia started choosing Asian airlines that still flew over Russia. Therefore, the negotiations in the aerospace industry will be very challenging.