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Russian car dealers go into agriculture

Staff Writer | May 7, 2017
The crisis in the Russian car market in its fourth year has forced car dealers to look for new business ideas, and agriculture has popped up as a surprise investment opportunity.
Kaluga food
Russia   Crimean Spring
Over the past three years the Russian car market has shrunk by more than 50 percent — from nearly three million cars sold in 2013 to 1.42 million in 2016.

The "Crimean Spring," Western sanctions, and above all, the devaluation of the Russian rouble, which has almost halved against major world currencies, has led to a catastrophic situation in the car industry.

But while some companies have been going bankrupt or selling assets, others — for example, the owners of Avilon and Major Auto, both top ten holding companies in Russia’s car industry — have found a solution by diversifying into agriculture.

Back in 2012 shareholders at the AkitA group, which owns major car dealer holding company Avilon, decided to invest in a new agro-industrial project.

And so a big greenhouse complex — Agro-Invest — appeared in the Kaluga Region and today grows tomatoes and cucumbers on an area of 43.5 hectares with a total investment of over $260 million (15 billion roubles).

In addition, the company has announced the start of construction is underway for a complex for growing button mushrooms in the Tula Region with an investment of $105 million (six billion roubles) and an industrial capacity of up to 25,000 tons of mushrooms.

"We are confident that the agro-industrial line of business will have an important place in the activity of our holding company.

As regards to profitability, innovation, and image, it will play no less important a role than the car business," says Irina Monakhova, general director of the AkitA managing company.


 

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