IN MID-JUNE THE SECOND KAZAKHSTAN AUTOMOBILE FORUM WAS HELD IN ALMATY, ORGANIZED BY A MEMBER OF THE EUROPEAN ASSOCIATION OF AUTOMOTIVE PARTS SUPPLIERS – THE LARGEST DISTRIBUTOR COMPANY PHAETON DC OPERATING IN THE MARKET AUTO PARTS HAVE BEEN OVER TEN YEARS OLD.
The path traveled by the company during this time has enriched it with experience and a considerable number of business partners and friends who willingly responded to the invitation and came to the southern capital from the most remote corners of our country, as well as near and far abroad.
Opening the forum, the head of Phaeton DC, Marat Shotbaev, said: “It’s not easy for all of us to work in an economic downturn, but today’s forum and the subsequent Phaeton Expo exhibition are an opportunity to stop, look back and see what’s happening around us. We will certainly receive a lot of useful information that will help us find fresh constructive solutions.”
Further, the head of Phaeton DC noted: “I believe that our company, as a leader in the supply of auto parts to the domestic market, has a social responsibility. As leaders, we simply have to carry know-how, lead, and demonstrate new capabilities. In turn, the company itself is constantly learning, we participate in foreign seminars and conferences, listening to the opinions of people competent in business.”
After Marat Shotbaev’s speech, the attention of the hall was completely captured by large Kazakh businessmen, including the head of the German Dvor group of companies Makhmut Shaidiev, the chairman of the Board of Directors of Kaztranscom JSC, the owner of several information companies Murat Abdrakhmanov and many others. Representatives of leading Kazakh companies shared their opinions on the domestic business climate against the backdrop of dynamic processes taking place in the global economy, and also made some rather cautious forecasts.
President of Globalink Logistics Group, Mr. Siddiq Khan, set the tone for the business meeting from the first minutes: “Since 2009, I have been hearing the word “crisis.” Like many business leaders, I have come to believe that this is not something out of the ordinary, extreme, and detrimental, but rather a new reality. We have to take a hard look at our business, at our expectations, at our business style.”
“Look at the most successful world economies,” Mr. Khan urged the audience, “you will find a general trend, you will see that none of these countries achieved success overnight, it is a long and difficult process. Three points are important: how the domestic market reacts to changes in the world, the second is regional reality, and the third is international cooperation. Kazakhstan is located inside a kind of sandwich between Russia and China. Can a country produce high-tech products cheaper than China? Of course no! And this is also reality.”
The fall in oil prices has led to cuts in expenditures of both the state budget and private companies, and this trend can most likely be considered long-term.
The speakers repeatedly drew attention to the problem of overregulation of the Kazakh economy, to the strong administrative influence on the part of government bodies, which inevitably reveals the unpredictability of market mechanisms and processes in the country.
Entrepreneurs also said that joining various international economic unions should theoretically lead to an increase in trade turnover and the opening of foreign markets, but so far it turns out that the Kazakh market is becoming accessible to everyone, and domestic goods do not find demand abroad.
MARAT SHOTBAEV: “THE PHAETON COMPANY IS A TEAM THAT TRIES TO USE ALL OPPORTUNITIES. WE COOPERATE WITH TECHNICAL CENTERS, ONLINE STORES, OUR PARTNERS AND EVEN COMPETITORS. THE MAIN THING IS THAT THE COOPERATION IS LONG-TERM AND MUTUALLY BENEFICIAL.”
Eldar Abdrazakov, head of the Centras group of financial companies, noted in particular: “Kazakh business has lost its regional advantage to Russia, which joined the WTO in 2012. An imbalance has arisen due to the fact that one country is already in the World Trade Area, while the other is not yet. Therefore, a number of large domestic companies went to work for their northern neighbors. Soon our country will become a member of the WTO, but how competitive we will be is a big question. We shouldn't expect too much that we will be able to compete with China or Russia, that we will suddenly become big and bold. Today, investment in the country is declining. The reduction of Russian business in Eastern Europe will most likely result in a more saturated presence in Kazakhstan.”
The head of the Tan Media holding, Armanzhan Baytasov, focused on the expectations associated with the devaluation: “The media market has dropped by 20-25%, but I don’t think that we should sprinkle ashes on our heads. The market is waiting for devaluation and is tormented by the question of when it will finally happen, because a terrible end is better than endless horror. Unfortunately, nothing depends on whether we want devaluation or not. I think it will inevitably happen, but devaluation, most likely, will not build a parity ratio between the tenge and the ruble, which means that it will continue to be difficult for us to work. Our products are not competitive in terms of quality, they are not competitive in price. I would like to see less politics and more economics in international cooperation.”
Answering a question from the audience about the training of specialists, Eldar Abdrazakov expressed the following opinion: “Kazakh school education today is at a completely acceptable level, but when we look at professional, higher education, everything looks much worse here. We don't train middle managers at all.
There is a huge gap between educational programs and real mechanisms in business. Therefore, in our company we have created our own academy, since we are not interested in specialists who know “everything about everything”, but are not able to work specifically with our information system. We turned to the state with the “National Champions” initiative, within the framework of which we asked to provide assistance in expanding the education of ten of the most capable young Kazakh business leaders.”
The speech of the head of the Allur Auto company, chairman of the Association of Kazakhstan Automotive Business (AKAB) Andrey Lavrentiev, opened the second block of the forum, which examined the development of the Kazakh automobile industry from the point of view of the largest domestic car dealers.
“The number of cars registered in Kazakhstan in the first four months of 2015 increased by 38% compared to last year,” said Mr. Lavrentyev. – This happened against the backdrop of a decline in sales at car dealerships, as buyers went to “gray” importers or began to import cars from Russia on their own. Consumer choice remains with budget models; the market is shifting to lower price categories. Speaking about this, I want to express doubt that anyone expects devaluation as a positive phenomenon, because purchasing power will fall even lower.”
Representative of the Astana Motors company Anton Afonin noted another indicator characteristic of this year. It lies in the fact that buyers refuse or “postpone until later” the purchase of car accessories, some additional options and equipment. The same applies to car repairs: if it is expensive, they are not in a hurry to do it either.
But Evgeny Kuznetsov, representing the Caspian Motors company, answering the question about servicing cars at dealer service stations, reflected the situation in the premium class. It turned out that the gentlemen who drive new Land Rover and Jaguar are doing well. They are serviced in the dealer network: timely, expensive and with guarantees.
Representative of the Aster auto company Askar Burushin noted positive progress in the work of the trade in program, which became possible after the abolition of double taxation. However, he emphasized that the number of cars purchased under this program is negligible. In general, sales of used cars have practically stopped. It is interesting that the criterion for determining prices on the secondary car market for banks is still the website “Kolesa.kz”, which, according to the unanimous opinion of those present, is incorrect and shows how badly the market needs an official catalog for trade in with a clear formula for calculating the cost of a car .
Many of the issues discussed at the forum were “for growth” and looked like wishes or, at best, plans for an uncertain future. For example, there were proposals for transparency of car service history in the network of official dealer centers, while even in Almaty and Astana the services of “aryk-services” are still in demand, and there is no procedure for mandatory certification of service stations not only in our country, but also in our country. but also in Russia or Ukraine. In the CIS, such a procedure exists so far only in Belarus, and Europe took this path relatively recently - in the early 2000s.
Further, Andrey Lavrentyev highlighted the most pressing problems of the domestic automotive industry: “The main challenges to the Kazakh automobile industry are our country’s accession to the WTO. Kazakhstan should decide: either we produce or we trade. After all, if we declare a desire to follow the path of industrialization, we need to create a scientific base, jobs, train engineers and obtain a competitive product with which we can enter the international market.
The second challenge is the gap in the EU treaty. The technical regulations did not contain a clause regulating the circulation of second-hand cars within the Customs Union. Apparently, everyone relied on their own environmental standards. Today this gap has been closed.
The third challenge is the policy of the Customs Union in the field of parallel imports.
As for automotive components, everyone understands perfectly well that we need them. And today there is a clear position of the government, which guarantees a return of 30% of investments made in this industry. It is clear that there is not enough volume within the country, but we could apply the successful Chinese experience, where they produce spare parts for two or three of the most popular brands.
The question of discrimination against gray car imports is often asked. I support protective measures, even though I myself have a company that imports cars of brands that are not produced here into Kazakhstan. If the state intends to develop the domestic auto industry, this must be purposefully achieved. If we put pressure, Mitsubishi will come and build a plant here. Otherwise, we will be forced to gather in different compositions, lamenting again and again that we missed our historic chance.”
Then representatives of the world's largest suppliers of auto parts considered a block of questions about the impact of the EAEU on the price and quality of goods, and on supply channels. They also drew attention to the qualitative and quantitative changes in the vehicle fleet in our country.
Jens Greissler, regional representative of Elring Klinger, announced the following data: “In Kazakhstan, the vehicle fleet density is approximately 270 cars per thousand people. In Germany, this number is twice as large and more than half of the service is provided by dealer service stations, and the investment in a car is about 700 euros per year, in Poland - about 300 euros. In the UK, car service is mainly represented by independent private service stations. But the pan-European trend is to expand the network of dealer service stations. Independent stations follow the path of specialization in a narrow area. In Europe, the supply of auto parts is mainly carried out by very large holdings with billions of dollars in capital turnover and a wide range of products.”
Great excitement in the room was caused by the answer of Dmitry Zimin, representing the Mahle brand, to the question of how Russian distributors, after the fall of the ruble exchange rate, manage to maintain last year’s prices. “Thank you for the question. I don’t know how this happens,” admitted Dmitry.
Thus, the forum received a riddle, the answer to which was not given by any of the speakers.
It was interesting to find out why in Ukraine the service channels for the sale of auto parts have reached such a high level: about 60–65% of the total turnover of spare parts is sold through car services there. In Russia, 70% of spare parts are sold on the market and only 30% through car service centers. In Kazakhstan, this ratio looks like 80:20.
Roman Romanyk, a Ukrainian representative of the IHR company, answered the question: “Success became possible thanks to the experience of Polish companies, and the factor of competition between small wholesale suppliers also had an impact. I will note, however, that there cannot be single generally applicable recipes here, because in Kazakhstan the population density is 6 people per square kilometer, in Russia - 9, in Turkey - 97, in China - 145, and in Germany - about 230. It seems to me , that for Kazakhstan one of the decisive factors is the issue of building logistics. In Ukraine, for newly opened service stations, a basic daily standard of 3-4 deliveries of spare parts from the distributor is provided. Despite the fact that the components, mechanisms and assemblies of a modern car are becoming more and more complex, after-sales service and technical support of the serviced car are also playing a leading role.”
Completely contrary to the persistent statements that not even every master can repair a modern car, the arguments of the representative of the Bilstein group, Maxim Grishakov, were heard, who spoke about the increasingly widespread practice in Germany of servicing and minor repairs of the car by the car enthusiast himself. This became possible thanks, among other things, to the development of the Internet and the presence of an increasing amount of special information on it. Let us remember that this is happening in Europe, where today there are more than 400 service concepts, of which the 25 most successful have attracted about 100000 independent stations.
The forum discussed methods of combating counterfeit products and the problem of the Economic Commission for Europe lifting the ban on parallel imports by 2020. The participants paid a lot of attention to the educational aspect of automotive service and examined new methods of promoting products and equipment. Thus, Jens Greissler called the topic of education central. He urged people to think about the situation when a mechanic installing a three-dollar filter on a car knows that he is working with counterfeit products, but deliberately does so. “When we conduct seminars on our products, we also try to influence the mentality,” said Mr. Greissler. “The message we're trying to get across is that if you don't operate a high-tech product correctly, you're bound to have problems.”
In the fourth block of the forum, trends and prospects for automotive service in Kazakhstan were discussed. The conversation was attended by Nikolay Zhanabergenov from Astana, representing the Auto Lend service station, Alexey Perepelkin from Bosch auto service Uralsk (Uralsk), Vladimir Molchanov, a representative of the Master start service station, and many others.
“New technical solutions implemented in the design of modern cars require increasing attention and competence from service workers,” noted Evgeny Ospanov, representing the Mega Motors service station network, in his speech. – Devices that provide special comfort in the car have raised the price of maintenance, and the cost of spare parts has increased. But even under these conditions, our network is growing. This happens thanks to an attentive attitude to the client and through a scrupulous study of the demand for repairs and maintenance of various brands of cars.”
Aidar Kozybakhov, an employee of Virazh LLP, again drew the attention of those present to the topic of training specialists - one of the most pressing and relevant. “I have more than once been a member of the graduation commissions of Kazakhstani vocational schools and universities that produce specialists for car service,” said Mr. Kozybakhov, “and I can share my impressions of the terrible situation when, in the 21st century, students are taught on diagrams and models of GAZ vehicles and ZILs that their grandfathers drove. After such training, the graduate has to be retrained and hired as a specialist with a higher education diploma as an assistant mechanic.”
Vladimir Obolonkin, head of the Turbo-diesel KZ service station, continued the topic: “We work in a very narrow specialized segment. So, in order to gain knowledge about the maintenance and repair of turbodiesel systems, I had to go to England. I also trained in Italy, Russia and Belarus. Nobody gives us such knowledge.”
At the final part of the forum, the participants were presented with a service concept that the Phaeton DC company had developed and will soon offer to its partners. Service stations and technical service centers that are ready for further successful independent development under the high-profile “Phaeton Serves” brand will be able to take part in this project.
You can view the photo report here
Text: Andrey Safonov
Photo material AUTOMASTER
More detailed information can be found at http://expo.phaeton.kz/