Henrik Nenzen was appointed president of Ford Motor Co. Russia and the C.I.S. last April after serving for a year as managing director of Ford Motor Co. Russia. A native of Sweden, he joined Ford in 1971. He told The Russia Journal about Ford’s current activities and plans in Russia.

The Russia Journal: When will the first cars be produced at Ford’s plant in Leningrad Oblast?

Henrik Nenzen: The first cars will roll off the assembly line at the end of this year, but they will still be prototypes. And the opening of the plant will be in the second half of April [2002].

RJ: This is going to be the first car-assembly project by a major foreign manufacturer in Russia. Do you think that others will follow the example?

HN: With the present import-duty level we have in Russia, I think that other manufacturers will do the same thing.

RJ: What’s the current situation at the plant?

HN: Everything is going as expected. Many people have already been hired and are working at Ford plants abroad to become supervisors once the plant starts. And we’re ready to start with the first prototypes at the end of this year.

RJ: Have you faced any problems while implementing this project?

HN: No more than you normally face when you build a plant.

RJ: What’s your view of the situation in Russia’s automotive industry? Has the way it’s been developing been good for foreign manufacturers?

HN: The total sales of all non-Russian makes will increase from 46,000 units last year to 80,000 units this year. This is a good increase, although it’s still far below 10 percent of the total market. There are few [auto] markets in the world where domestic manufacturers have a 92 percent share. In fact, I don’t recall any market where domestic manufacturers have such a high share. I think that more and more Russians are discovering that, although Western cars have a higher price, the ownership costs of foreign-made cars are coming down and the total ownership costs [of Russian-made and foreign-made cars] over a 10-year period are not that different.

RJ: In what way is Ford’s strategy in Russia different from its strategies elsewhere?

HN: Personally, I don’t find this market very different. It is different [only] in that domestic manufacturers have a higher share, but it was a surprise to me to find that the Russian consumer is very similar to the European consumer. He wants the same things – air conditioning, ABS [anti-lock braking systems], sports vehicles and airbags – and he thinks a lot about safety, reliability and dependability, like in any other market in Europe.

RJ: So, your operations here are not much different from elsewhere?

HN: No, I would say they are very similar. But we do adapt our cars to make them more suitable to the Russian market, so they start when it’s very cold and so that in spring time when there’s a lot of water on the roads the engine doesn’t get ruined. We have just introduced heated seats, heated mirrors and heated windshields on our Focus model. And all these features are important for the Russian market. So, there are some [special] things that we have to offer [to Russian customers] but in principle we have the same approach as in other European markets.

RJ: If more foreign auto manufacturers come to this market, is it likely to increase competition?

HN: I think competition already is very strong. The consumer has a choice between a Russian-made car and an imported vehicle, and he will soon have a third choice, a Ford, GM or Renault built in Russia. I think competition will be as tough in the future as it is today.

RJ: What are Ford’s projections for sales for this year in Russia?

HN: Last year we sold 1,300 vehicles, and this year we’ll sell 4,500.

RJ: The absence of a system in which people can buy cars on credit is believed to be a negative factor for foreign car manufacturers in Russia. In what way does it affect the market?

HN: This country is probably the only country in the world where 99 percent of buyers just go to a dealer and buy a car, while in other countries more than 80 percent take retail-finance contracts on the difference between the down payment and the price of the vehicle. If we had a well-functioning retail-finance system here, sales would be much higher. One thing we set our hopes on is that it will be made easier for finance companies to come here without having to pay a big penalty to establish themselves. We would probably have Ford Credit, which is the world’s biggest retail-finance company, [come here] but today the entry ticket for this market is too expensive. But if the law changed a little bit, they would be here as in any other country of the world.

RJ: In what direction do you think the Russian car market is going to develop in the future?

HN: All the factors are more positive than they were at the time when we made the decision to build our plant in Leningrad Oblast, which is not always the case when you plan a project with such a long return [period]. The state economy, the rules under which foreign or Russian companies have to operate, tax rules and administrative regulations – all of these factors are more positive than they were when we made our decision to invest. So, in the future we see a good growth in total car sales in Russia and an even bigger growth in sales of non-Russian makes. We think that we have a lot to offer – not only Ford but our competitors, too. And we also see that other Western manufacturers will invest in Russia in the next two or three years.