The demand for diesel engine in Russia and other CIS countries dates back to as early as 1915, with set up of factories for manufacturing of diesel engine in Russia. Though, the market demand boomed during late 1940’s, which saw set up of multiple diesel engine manufacturing plants across the Soviet Union. Local production of diesel engines declined post Soviet Union break up. CIS block (ex- Soviet Union states) consist of 11 countries namely Russia, Belarus, Ukraine, Kazakhstan, Uzbekistan, Azerbaijan, Moldova, Turkmenistan, Tajikistan, Armenia and Kyrgyzstan. CIS Market shifted significantly to imports in recent years with accession of Russia and Ukraine to WTO. Top 6 countries by GDP namely Russia, Ukraine, Kazakhstan, Belarus, Azerbaijan and Uzbekistan contribute 98% to CIS GDP. These countries also have significant manufacturing base with 97% share of CIS’s manufacturing value added. These countries contribute to more than 95% of the market demand for the non-automotive diesel engines and are thus focus of this study. Diesel engine industry is concentrated in few pockets of CIS. Major manufacturing areas of western Russia (Nizhny Novograd, Yaroslav), Altai (Russia), Chelyabinsk (Russia), Dagestan (Russia), Minsk (Belarus), Tashkent (Uzbekistan), Kostanai (Kazakhstan), Kharkiv (Ukraine) contribute significantly to the local production and the market demand.
Demand for diesel engines for automotive applications in CIS has been muted considering the perception about the use of diesel engines in extreme cold climates. As a result the diesel engines were primarily used in CIS for non-automotive and commercial vehicle purposes. Diesel engines are manufactured in two-stroke and four-stroke versions and have found applications in ships, trucks, locomotives, agricultural machinery, and construction machinery. Demand for diesel fueled cars has improved over last decade. Diesel engine with its high thermal efficiency thrives strongly in the Russian and CIS block. Non-automotive diesel engines are available in a wide range of power outputs in CIS. The local production is leaned towards meeting demand for high powered engines. Increasingly, the low powered engines are being imported from China and Japan to meet the local demand. CIS market is more biased toward use of high powered engines across the industry segments. Agriculture and construction equipments account for 89% of demand for non-automotive diesel engines in CIS. Gensets and Marine are the other demand drivers.
Summary of key findings
The non-automotive diesel engine market is estimated at XX units in 2015 and is valued at USD 1.34 Bn. Production of non-automotive engines in 2015 in CIS was YY units. The market is expected to grow by x% CAGR over next 5 years to $ xx Bn in 2020. Agriculture machinery and Construction equipment dominate the market with 89% share. Engines in power range 56-100 KW contributes the largest share (32%) to the market. Russia is the largest contributor to CIS non-automotive diesel engine market with AA% share. Belarus is the second largest contributor with ZZ% share. Russia is expected to remain the largest market primarily driven by strong growth in Agriculture and construction. Local production share has declined from 69% in 2008 to 55% in 2012. Post-recession, multiple diesel engine manufacturers in CIS (Kharkov engine plant, Tokmak diesel plant, Kostanai diesel plant) have closed down. With relaxation of duties (Post-WTO accession of Russia and Ukraine), end equipment manufacturers have focused on cheap Chinese products resulting in further decline of local production.
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