RUSSIAN PURCHASING POWER & WESTERN AUTOMAKERS

2.Why do you think the kit-assembly approach was not more successful in Russia? It was a common automaker production/distribution strategy employed in much of the world’s emerging markets, but was not working in Russia.
â?¢Complete knockdown kits (CKDs) and semi-knockdown kits (SKDs) are methods used by some of the major global automakers like GM when it enters a smaller emerging market
â?¢Kits utilize local low-cost labor for much of the final assembly, and little capital has to be actually injected into the country to initiate production
â?¢Russian market, however, was not a small market (more than 1 million new cars sold there in 2000 alone (the market actually hit 2 million new cars in 2007)
â?¢GM in the past had tried bringing in Chevy Blazer kits, but had made a major cultural mistake in that the actual kits had been built in Brazil, a country with a terrible product quality reputation in Russia
â?¢Kits would only be effective if there were limited low-end choices to average consumers; but high-quality used cars periodically flooded the Russian market – resulting in high-quality and low priced competition for kit market segments

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