Sergey Kogogin: "The state defense order remains a priority for us at any time"

CEO of KAMAZ on plans to occupy half of the truck market in the future, on the group's future in divisions and on the realities of robotics

Sergey Kogogin, General Director of the Kama Automobile Plant, in an interview with corporate media resources, tells which sales channels KAMAZ is counting on this and subsequent years, about the group's future in divisions, about the realities of robotics and faith in "once lied", and also clarifies whether it is possible to purchase components from Europeans if they return to the Russian market.

— Sergey Anatolyevich, over the past three years, both the country and KAMAZ have been experiencing a new challenge, which has replaced COVID-19. How, in your opinion, did KAMAZ pass the next stage of testing?

— The beginning of the CBO threatened KAMAZ with destabilization, because we were building a global company based on international partnerships. When the partners had to say goodbye to us, the situation became critical, but the entire KAMAZ team — the development service, production, and purchasers — all fulfilled their tasks. Never before in its history has the company resourced in such a short time, or changed the design of a car for new suppliers. This led us to serious quality issues, but already in 2024, in fact, during the first quarter, we stabilized the operation and the K5 car resumed the appearance that customers are used to. The second challenge was the sharp increase in the state defense order. We had just switched to K5 production, invested mainly in this generation, and K3 was still being produced on old equipment. It was repaired, of course, but the forty-year-old machines could not provide a normal pace of work. Nevertheless, our employees fully fulfilled the state defense order. The intensity with which they achieved this is simply amazing. The Scientific and Technical Center also turned to the needs of the Ministry of Defense: in a few months, both an armored cabin and an armored vehicle were designed and manufactured, which we transferred to Remdiesel production. I am proud that the work of our team has saved tens of thousands of military lives.

— KAMAZ coped with those challenges, showing excellent financial performance, but ended 2024 with a loss according to RAS. What is the reason for this?

— Sales at the end of last year and at the beginning of this year primarily reflect a change in the Central Bank's financial policy. Our traditional sales channels through leasing and car loans have become burdensome for customers. This applies not only to the automotive industry, but we see symptoms in construction and in many other areas of the national economy. They lead to a decrease in production and GDP dynamics. In the commercial vehicle segment, we always feel these processes first, as it is an investment product. Everyone who is currently faced with the choice of "buying a new car or driving an old one" chooses the second option. Even those who have money deposit it in the bank — when else will there be an opportunity to earn income without doing anything? We are all witnessing the global transformation of the economy and must get used to it. An excess of cars from China was superimposed on this process: by the beginning of the year, as far as I remember, there were 40,000 cars on the market, and even more than 20,000 were returned by the lessees, also mostly Chinese. If we focus on the current market forecast, that is, on sales of 60-65 thousand cars this year, then we can not produce anything at all — all these cars are already there. Just yesterday (the press conference was held on March 26) Anton Viktorovich Saraykin, Director of the automobile plant (Deputy General Director of KAMAZ PJSC for Sales and Service) He said that for the first time, dealers are selling more equipment from their warehouses than they buy from us. I won't say on what terms they started selling, but the market won't collapse, it will return to normal tracks. These machines do not duplicate our product lines, and although the situation is not easy for us, it is not fundamentally new, because KAMAZ has experienced many crises. In addition, there is one feature in Russia: if the car has been in stock for a year, it is not a fact that it will be put into operation at all. Maybe it's cheaper to disassemble it for spare parts. I think this is happening now.

— In this case, should KAMAZ look for new sales channels or sales methods?

— In general, there are none. Of course, we are shifting the focus of attention to corporate clients. Companies such as Gazprom, Rosneft and other raw materials companies buy trucks every year anyway and feel financially fine. We do not forget about the large, intense state defense order. The needs of the army will not close with the end of hostilities, because the army fleet will continue to require replenishment. Finally, we have special equipment factories — utility vehicles wear out anyway. Take Moscow, which alone has contracted almost a thousand units of municipal equipment from us this year, and we are already discussing supplies for 2026 and 2027. The list of models and the number are defined. The Moscow government wants to hold a tender this year with our participation.

— Export supplies are probably insignificant so far?

— The volume of exports for the year will be small, at the level of 4-5 thousand cars, as our company is subject to sanctions. Both delivering and receiving money have become a special case, a task with many unknowns. However, our export specialists are still doing well. A lot depends on the positioning here — even in neighboring countries, companies with foreign participation refuse to cooperate, even in the absence of sanctions signs. Just because it's a KAMAZ truck. Nevertheless, the tasks are being solved, and the domestic market will soon return to a stable position. We have been waiting for stabilization since July. In the second half of the year, demand will be affected by another national factor: carriers in difficult conditions, in order to preserve their economy, stop servicing cars, and this significantly reduces their service life. Therefore, many parks will stop by the end of the year.

— Is the estimated 60-65 thousand cars a lot or a little for the domestic market, in your opinion?

— This is the equilibrium state of the Russian market. In 2023, 135 thousand trucks were sold, in 2024 — 111 thousand, and these were abnormal sales, excessive for our economy. Now it's reaction time. We can take the mainline tractor segment specifically: 70,000 were sold in 2023, although the market has always fluctuated around 30,000, and the principle of a five-year cycle works in this segment — growth is followed by a decline, then growth again... Now we are witnessing the destruction of the secondary market, because no one knows the real price of a Chinese long-range tractor of any brand. What can you expect from this truck after three years of operation? It takes time to figure it out. Meanwhile, customers who had previously bought K5 began to return to us.

— What market share can these processes provide to KAMAZ in the short term?

— The dynamics in this sense are confident: if in 2023, after the departure of the old suppliers, we could not quickly increase production to meet the new level of demand and reduced our share to 18%, then in 2024 we returned to 26%. We ended last February with 31%, and we set the target level at 50%, which we returned to at the beginning of each crisis.

— Three years ago, Chinese brands replaced the departed Europeans and partly changed the rules of the game. How do you rate their methods of competition?

— Along with the opening of borders for parallel imports in Russia, certain regulations were suspended. State technical supervision has actually been frozen. After we stopped being overwhelmed with supplies, the Gostekhnadzor function was restored and the first checks showed that — no, this competition was not fair. Yesterday, on the street of a Chinese city, I saw an 8x4 dump truck and I can say that it does not have the dump truck platform that we see on our roads. When I pointed this out to a colleague, the vice president of a major Chinese company responsible for exports, he explained that China has strict regulations on this issue. In other words, they work strictly according to the regulations at home, and they brought vehicles to us, which today is de facto dangerous for road users. There are a lot of inconsistencies, although our technical regulations are approximately the same.

— To what extent is the consumer able to assess these discrepancies?

— In response to this question, I can tell you another case, already from the Urals. The CEO of the partner company escorted me to the airport, and at the intersection we saw a car — one of those whose certificates of conformity have now been revoked. The body is 35 cubic meters, it definitely carries more than 40 tons of land. The pressure on the road is devastating. And just before that, a colleague showed what social projects the company is conducting in his city. I'm asking you how to explain the fact that you invest billions in the social environment and immediately destroy the city for a small short—term benefit? He explains this approach by economic expediency. I immediately take a pencil and show in the diagrams how they will render the central city street unusable in one season: savings on equipment — one hundred thousand per month, and road works per billion. This was even before the recall of the OTTS from the Chinese brand, just a couple of days. The fact is that their cars are made for special—purpose roads - for quarries, in particular, but not for public roads. What should the state do in this case? Obviously, it is necessary to strictly control the fulfillment of technical requirements. After all, we design roads for an axial load of 11.5 tons, not 13 tons. Even in Naberezhnye Chelny, where most of the roads were designed with a concrete cushion, taking into account the construction of KAMAZ — even here we see widespread rutting. We repair roads every year, but the ruts appear again.

— Does KAMAZ take into account the ban on the operation of Chinese-brand trucks in its target for half of the market? And do the Chinese have a chance to return to the market this year?

— Of course, we take into account the circumstances. And the manufacturers of these machines, I think, won't make it in a year. They just don't have a culture of running recall campaigns. They followed a simple principle: while Russian legislation sleeps, we act. Now it has woken up, and they need to fix the problem with warehouse balances first, then finalize the obvious technological failures. For example, the braking systems — they can't be left in their current state, otherwise we'll get a lot of deaths on the roads... Accordingly, cars that are already in operation will stop. What does the consumer do in these conditions? He gets a report on why his car is frozen and sues the importer. Those who have done it will suffer heavy losses and lose the trust of customers.

— If the production of civilian trucks did not show any dynamics at the end of the year, the number of buses produced increased by 3%. Will the company shift its focus to passenger vehicles? Will its share in the KAMAZ investment portfolio change?

— We have identified all investment areas for passenger transport, and I would not call the bus market stable either. Rather, our own developments were crucial for us. Firstly, at the end of 2023, we signed a major multi-year contract with Gazprom. In the first quarter and part of April, we have more than 50% filled with orders from the state corporation. In January, however, we were forced to stop production in Neftekamsk and send people on vacation, but only because the components did not arrive in time. Secondly, there is, of course, Moscow. We have signed a contract for 400 electric buses, and in terms of labor intensity, one electric bus is equal to two and a half buses. In addition, on behalf of the President, the government allocates additional funds for preferential purchases of passenger transport. I think the federal subjects will already know the funding limit in April, but they still need buses. Take Naberezhnye Chelny, for example — the mayor has already said several times that the city needs 80 more buses to fully cover the route network. KAMAZ is no less interested in this, because the mayor and I are discussing routes to the industrial zone to transport our workers. It is difficult and inefficient to transport people in shifts alone, and flight routes will greatly simplify logistics. We used to close these services with trams, but since then the city has grown, and the trams are no longer ours. And strategically, we continue to increase passenger transport production capacity, and we want to reach the target level of three thousand units per year in 2027. This year, according to the business plan, we expect to sell 2,350 units, which is 7% more than in 2024. In the future, we are thinking about building a service plant for electric buses.

— Regional purchases should provide KAMAZ with long-term prospects in the bus segment, but does this apply to expensive electric buses?

— The Moscow passenger fleet renewal program goes beyond 2030, and they are no longer going to buy buses with internal combustion engines, only electric ones. Now we are waiting for the next tender for two years. Moscow is a very demanding client, and it is difficult to work with her, but it is pleasant, because in Moscow they always know exactly what they want. We believe that Moscow's purchases will not stop in 2030 either, because the city is expanding, and the rolling stock of the first wave will need to be updated. In addition, KAMAZ has already delivered almost a hundred electric buses to other regions.

— KAMAZ has recently made its presence known on the marketplace for the first time. How do you assess the effectiveness of this area?

— Only positively. We have opened online sales for the Compass project, and this method of implementation has already confirmed its right to life. Costs have increased, of course, because the direct sales division had to dramatically increase its staff. But, although it is cheaper to work with dealers, contact with the customer is important to us. When the idea to enter the marketplace matured, I wondered: if Musk and Tesla did it, then why can't we do it? Today, the mechanism is working, we are studying it and thinking about the prospects. Of course, we can't put the entire range online, so we've taken a Compass for now.

— But can K5 also appear on the marketplace?

- of course. I think it will be necessary to choose one model of the fifth generation and sell it only online.

— What volume of online sales of the main products would KAMAZ like to reach by the end of the year?

— According to the Compass, the task remains at the level of the initial plan — it is 4-5 thousand cars. In the case of K5, everything depends on Anton Viktorovich Saraykin. Sales are still low — only about 200 units have been sold — but the technology is there, and people are still buying more and more online. I see how the youngest son does it — it's pretty simple.

— Do you personally not buy online? I'm also curious if you use social media, do you have network resources?

— I'm not buying. As for social media, of course, I read something on Telegram, but I don't advertise myself and I don't have accounts. I'm just not satisfied with the level of communication that people show on social media.

— Sergey Anatolyevich, which of the strategic projects are priorities for KAMAZ today?

— The state defense order remains a priority for us at any time — we are obliged to fulfill it on time, and at the moment we are significantly ahead of schedule. In the second place in importance is our main product. It is necessary to expand the K5 line, to enter different factories of special equipment with this chassis. Right now, I'm more concerned about all-wheel drive heavy vehicles. Previously, this niche was occupied by Volvo and Man, now it's up to us to fill it.

— How localized are the K5s and what else can be done in this part?

— The cabin is completely localized, and so is the frame. Engine — more than 80%. These are all key elements, and the percentage will grow in the next two years due to the localization of 54 more components. The box, if we talk about the robotic one, is still Chinese. But that's for now. Our own bridge project is under implementation. Thus, today the truck has been localized by more than 70%, which is a high level. We are currently working with suppliers to ensure that they use domestic raw materials, but trying to do everything ourselves is an unsolvable and thankless task.

— If sanctions are lifted from Russia and foreign partners once again offer KAMAZ their components at a competitive price, what will the company do — will it buy where it is cheaper or will it maintain its course towards import substitution for the sake of its own sustainability?

— It's a difficult question. Do you remember Kozma Prutkov's "Once you lie, who will believe you?" Yesterday I came across another interesting book. The author is from abroad, but in his book I found answers to the thoughts that were overwhelming me — on the topic of the crisis of democracy in the world. The author argues that active and literate people no longer go to power in European countries. 1.3% of people from science and engineers remained in power. Let's remember the truly charismatic European leaders: Margaret Thatcher is a chemical engineer who worked in the plastics industry and perfectly understood economics and management; Angela Merkel is a doctor of chemistry... Today, most of the people in power are highly politicized and unfamiliar with real life. It seems to me that in European countries the authorities are now working more on the process than on the result. Accordingly, if political relations are escalating today, and peace is coming tomorrow, who among sane people is ready to say that in a couple of years everything will not happen again? Probably, it is necessary to work with those partners from whom there are no surprises. Of course, we will never achieve one hundred percent localization, but today we see a huge supplier base in China and India. Their quality is quite high.

— What is the quality of Russian suppliers? Are they ready for stable timely deliveries?

— I can't say anything bad about Russian suppliers, because all our partners tried, although they didn't always succeed. For many years we have been buying engine components from Bosch, and from the moment we calibrated, verified and accepted their products, we did not know any quality problems. When we had to switch to Russian and Chinese suppliers, we were faced with a full range of complaints. It took time for both us and them to bring the products of the new suppliers up to standard. The Chinese are never in a hurry to start at all — they consider, postpone... Plus the language barrier. And we were faced with the task of introducing more than a dozen new K5 models annually... The important thing, however, is that no one refuses to move forward.

— And yet, if a European company offers cheaper components tomorrow, will KAMAZ agree?

— We have not received such proposals, so it is premature to talk about it. We always focus on the balance of price and quality. But at the same time, it should be understood that a car consists of tens of thousands of parts, while several remain key among them — the engine, frame, axles, gearbox and cabin. We will do everything related to these components ourselves. And, say, brackets, bolts and nuts... although we also have our own factory for bolts and nuts... but in general, we will not deal with such peripheral things. We will not deal with plastics, although there is plastic production in Naberezhnye Chelny. We will not produce electronics ourselves — this requires too deep competencies, and it will take a long time to develop them. But we will develop digitalization, develop software, and these tasks are already being successfully solved. At the Moskvich plant, which is close to us, for example, the entire production cycle has already been restarted using 1C solutions.

— How would you assess the level of current digitalization and robotization of KAMAZ?

— The cabin frame plant, launched in 2019, was probably the first machine-building plant in the country to operate in the Industry 4.0 format. It was also the first in the Daimler ecosystem. There are simply no other approaches in the Chinese industry today. I just looked at several factories of automatic transmissions and diesel engines, it's the same everywhere: Industry 4.0 and 90-95% robotics. We still have to go through this path, and when I think about how much money he will require, I feel sick. But it is inevitable, and we will form all investment projects immediately in the concept of Industry 4.0. Digit provides new approaches to both quality and productivity issues, and the problem of the workforce in our country cannot be solved in the near future. Official statistics say that we are missing about six million workers, and there is no way to hire them from anywhere. That is why we fill vacancies with migrants and do enough to enhance the competencies of these staff even at the recruitment stage. Legislation in this area is now being normalized. I consider the adoption of the law on illegal migration to be a very important step. Now we can expect that there will be no illegal immigrants on the streets, to whom the laws of our country are purple. The migrants we invited to KAMAZ come to work, and we organize leisure activities for them ourselves. They remain under our control from the moment of arrival in the country to the moment of departure.

— Do they work well?

— In different ways. If there are not enough qualifications, then the management of the departments puts them on auxiliary work. But I notice that a lot of people quickly learn the profession and reach the level of our staff. They are the ones we focus on in the first place. I repeat: KAMAZ has built its own system of working with attracted workers. We don't take them, as they say, from the street. The selection process begins in their country of residence, where, together with local authorities and our partners, we evaluate people's competencies and select those who best suit us. We bring them here centrally, process the documents, put them in our dormitories, where they remain under the constant control of our security service, and constantly carry out preventive checks. If a foreign worker leaves the country, we ensure that he leaves the country, although we cannot legally require this. Such a bill is currently under consideration. It's not for nothing that the authorities constantly set us up as an example for other companies.

— Robotization always raises the question — how many people will remain at KAMAZ by the time it finishes?

— You can figure out the proportions. If you remember, one of the important messages of the president's message after the election was to raise the level of robotization of industry to the ratio of 230 robots per 10,000 employees by 2030. By the way, I calculated the cost of such a project then, it turned out to be 1.2 trillion rubles. At that time, KAMAZ had 26 robots per 10,000 people, and the national average was 6 robots. So, if we take our cabin frame factory as an example, it now has a proportion of 1,600 robots per 10,000 people, and actually 114 robots are employed in production (proportionally, 114 robots per approximately 700 people, ed.). But, frankly speaking, so far robotization has not met some of our wildest expectations. It's at the carcass factory that the processes are set up and the people are trained, but when we put the robot in the production chain at another site, the effect is completely different. Everything suggests that robotics gives maximum effect only when creating a new production from scratch. For example, at the foundry we have 4,500 people who produce 90 thousand tons of casting per year. At the foundry, built on the principles of Industry 4.0, 500 people will be able to produce 45 thousand tons. In addition, KAMAZ has a desire to participate in the creation of a Russian robot manufacturer, especially in the field of integration of technical processes. We are currently working in this direction in alliance with the company Eidos Robotics.

— In addition to robotization and attracting foreigners, does KAMAZ have any other methods to solve the personnel problem?

— We make a lot of efforts in terms of working with young people, and not only within the company. In the course of our career guidance work in 2024 alone, there were over 58 thousand people — these are children, teachers, and parents. We have attracted significant, including federal, resources under the Professionalism program — we are partners of three clusters only in Naberezhnye Chelny; we have created an Advanced Cyberautotech Engineering School in the city together with KFU. The Republic of Tatarstan, KFU and KAMAZ have invested a lot of money and significant changes in it. No other factory in our city has made such attempts yet. Our corporate university, as well as the MIITU and MCPC corporate training centers, are also doing well in terms of retraining and advanced training of employees of both our company and the entire KAMAZ ecosystem, including suppliers and dealers. Thousands of people study there.

— Does the modernization of production lines and workplaces help to stabilize the team?

— Over the past 5-6 years, we have changed a lot in terms of ergonomics and workplace comfort, and after upgrading the next workshop, I always hear from the plant director that the team at the sites is stable. Today, the machine should be like a gadget in your pocket — young people go to such equipment. Keeping young people in the city is a common task. In Naberezhnye Chelny, the level of school education is so high that it allows more than 80 percent of graduates to leave. Everyone goes to St. Petersburg, Moscow and Kazan, and the return flow first revealed itself only last year.

— What is the shortage of personnel at KAMAZ today?

— There is no shortage as such, we cover the shortage of people by attracting workers. To replace them, we lack 3-4 thousand people, who cannot be found in the current reality in the city, even at the expense of salaries. It is already higher than the average for the city and Tatarstan. Last year, we had to raise salaries in some professions by 26-27% and expectedly lost productivity dynamics. Now we need to increase it, which will also reduce the need for staff. We've bought quite a lot of modern, progressive equipment, and it's not fully loaded yet, so there's potential.

— Recently, KAMAZ has separated the aggregate production into an independent bridge plant, and it looks like similar steps will be taken at other plants in Naberezhnye Chelny. What is the essence of these transformations?

— We have been approaching this topic for many years, and Irek Florovich (Irek Gumerov, First Deputy General Director of KAMAZ PJSC, appointed in September last year) finally had the courage to implement it. The fact is that the main priority for the director of an automobile plant is to ensure the operation of the conveyor and his team. Because of this, aggregate production has always remained on the periphery. There was an underfunding of repairs, people were removed from the assembly line in case of a shortage of hands... Now we want to switch to a divisional structure. Up to a certain point, we were able to manage everything comprehensively, but the company has grown too much and continues to grow, becoming more and more cumbersome. At the same time, we often see that a legally independent subsidiary, which within certain limits makes its own administrative decisions, works faster and earns more. Therefore, now we need to grow competence centers based on the divisional model. For example, Yuri Ivanovich Gerasimov (former First Deputy General Director, now deputy for automotive components) manages component plants today. These are separate legal entities in the holding structure, and the director of each plant is not only rooting for the plan, but also for economic efficiency in general. The motivational component, that is, the financial reward, is based on this.

— How many such dedicated plants can be created eventually?

— At the beginning of this year, we held a strategic session, worked out certain approaches and are now detailing the terms of authority that should be transferred to the divisions. Trucks, of course, will remain the backbone of the corporation, and non-truck-related businesses will be the first to float freely. The second stage will be the production facilities, which are also tied to the main assembly line, but in which we claim a significant market share. Shouldn't we expect our engines to be the best in the world? This means that they need to be produced not only for KAMAZ trucks. Our trading house already sells engines to diesel locomotive manufacturers, power engineers, and agricultural machinery, and we intend to compete with this product for the market in the same way we do with trucks. Thinking about it, we saw that KAMAZ produces 90% of its engines for itself, and the rest doesn't seem to matter to us ... No: we need to do at least 50-50, increasing the volume and ensuring that products such as our engine are used in all areas. Divisional managers and plant directors will be responsible for this.

— In addition to defense order supplies, KAMAZ also sends serious amounts of patronage to the front. Are there many KAMAZ workers serving in the SVO zone today?

— Our conscripts are divided into three regiments, and we have taken over their patronage. There are not many workers from KAMAZ there — 60 people — but, firstly, they are there, and secondly, most of the contingent of these regiments are residents of Tatarstan. For them, meetings with us are also a connection with their small homeland. Because of this, they know that they are remembered at home. I believe that there are no small things in such matters, and I hope I have managed to convince our entire team of this. I personally asked the factory directors not to forget the families of the mobilized, and now I sometimes receive letters of thanks from my wives. When your husband's work comes to visit you on a holiday, just to drink tea, give you something, maybe not even particularly significant, it's still important. The important thing is that they don't forget. After all, brothers, husbands, and friends have gone to the front, and the hardest thing for them is to leave their family here unattended. Therefore, immediately after the mobilization began, we developed a system for both financial and moral support for families.

— Do the needs of the military change over time?

— For example, we have not been carrying stew for a long time — we have seen and know that the fighters are very well supplied with food. Now we are bringing what they themselves are asking for, and these are building materials to strengthen their positions, spare parts for repairing KAMAZ trucks, and electronic warfare stations. Many commanders said that the Sickles we bought (a series of Russian electronic drone suppression systems) saved many lives. It is important to emphasize that a significant part of the patronage is collected by our employees. The company invests, of course, many times more, but after all, the person gives his own. I also sign all the statements when we announce a fundraiser, and at least once or twice a year I go with the transfer of patronage "for the ribbon". It's important for soldiers.

Sources: "Vesti KAMAZ" (first part), "Vesti KAMAZ" (second part)