After spending many years adjusting to a free-market economy, Russia’s truck industry has finally matured: A strong, healthy demand of its products matches a steady supply.

While the truck industry is not immune to economic cycles, it has been enjoying a steady growth period since it recovered from the 1998 economic crisis. Although most truck makers have reoriented themselves from inefficient, state-sanctioned production approaches, some issues, such as slow modernization, weak design solutions and the lack of environmental standards, still dog the industry.

Broken down by vehicle weight, Russia’s truck market consists of three main segments: small-tonnage, light- and medium-tonnage and heavy trucks. The vehicles serve a variety of purposes, from carrying international cargo and making intra-city deliveries to serving on construction projects and agricultural sites.

Passenger transportation – such as minibuses – also represents an important segment of the market.

The residues of the Soviet-era inefficiencies make it difficult for the domestic truck makers to not only compete on international markets, but to satisfy local customers. The difference between domestically produced and foreign trucks is enormous.

Yet domestic producers manage to satisfy the demand for small vehicles, having secured a 98 percent market share. Obviously, their main competitive advantage is price. Depending on the model and modification, a Western European truck could cost nearly 50 percent more than its Russian counterpart.

For example, GAZ, one of Russia’s major automakers, has managed to create a monopoly in the small-tonnage segment, thanks to its popular GAZEL trucks and minibuses. These truck not only comply with many Western standards, they are also easy and inexpensive to repair. Frequent factory defects, high fuel consumption and low comfort level may still haunt GAZEL owners, but most Russian consumers have gotten used to such "minor" problems.

Speaking of comfort level, Russia’s infamously deficient vehicle design does not reflect a lack of inventive designers. On the contrary, Russian car designers often invent unique solutions that have no analogs in the world, but the outdated technological and production base prevents these ideas from becoming reality.

The problem of environmental pollution deserves special mention. Russian producers of automotive engines can match the quality to the European standards, but this will impose tougher requirements on the technology as a whole, and, as a result, boost the prices. Moreover, a poor technological foundation often makes it impossible to combine lower pollution with such essential qualities as engine capacity, torque and dimensions. These disadvantages force some Russians to turn to foreign trucks.

Last year, 1,105 foreign small-tonnage trucks were sold in Russia, while the total volume in this segment equaled 106,000 vehicles. Ford Transit, VW T4/Caravelle, and Toyota HiAce made the best-sellers list; Mitsubishi L400/Space Gear and Mercedes-Benz Sprinter were also among the popular models.

Within the light-to-medium truck category, domestic producers have also managed to maintain the lead – sales of foreign vehicles do not exceed several dozens a year. In addition to the price factor, the reason lies in high customs tariffs, which amount to roughly 15 percent.

Heavy trucks, used mainly for international deliveries, have to comply with European environmental and safety standards. Although seven manufacturers, including DAF, Iveco, MAN, Mercedes-Benz, Renault, Scania, Volvo, and Belorussia-based MAZ-MAN, satisfy these requirements, Volvo is the most popular in Russia.

Overall, domestic producers are beating foreign truck manufacturers hands down. Of the 60,000 medium and heavy vehicles sold last year, only 537 were foreign.

Used trucks represent a separate segment of the market. In Eastern Russia, most inexpensive used trucks come from China, while in Central Russia American trucks with huge cabs and rusty handles dominate the roads.

Market research shows that the share of the so-called "gray imports" – foreign vehicles brought to Russia through unofficial channels – is negligible, mainly because of the integration and certification problems.

What awaits the Russian truck market? Gradual adoption of European standards will force Russian automakers to improve the quality and, consequently, raise prices. As a result, consumer preferences may shift in favor of foreign vehicles in the distant future.

However, for now Russian truck manufacturers are enjoying a steady, if not dizzying, growth.

(Figures quoted in this article are from the company’s internal database compiled on the basis of statistical releases of the official representative offices and their published statistical reports.)