The market for Russian rolling stock in Central Asia is under threat due to sanctions

In particular, the Chinese CRRC is gradually entering the production market of EAEU locomotives, this is reported by the railway transport news portal Railway Supply.

At the end of February, it signed a cooperation agreement with the Kazakhstani state fund “Samruk-Kazyna.”

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This agreement currently remains strategic in nature without specifics. However, it was noted during the meeting that Kazakhstan is interested in deep localization of locomotive production and the establishment of service centers for equipment maintenance.

In the short term, the appearance of a CRRC locomotive factory in Kazakhstan can be expected amid a large announced order.

The localization level is likely to be low, as foreign manufacturers do not aim for high localization levels in Kazakhstan, and local authorities support this.

For example, Alstom achieved a 31% localization level for electric locomotives after 10 years of operation in the country and plans modest increases in the future.

On the Kazakhstani platform, the Chinese manufacturer can establish the production of locomotives with EAEU certificates, thus also gaining access to the Russian market.

Moreover, CRRC can also establish the production of other rolling stock products at these facilities, such as electric trains, metro trains, and passenger cars.

The presence of EAEU certificates will allow it to supply this production to all countries in this area.

Overall, Kazakhstan is actively replacing Russian partners with foreign ones.

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A case in point is the sale of Tulpar Talgo assets, a story that has been unfolding since 2019: the Russian manufacturer offered more favorable conditions compared to Stadler, but the Kazakh side strongly desired to have the Swiss company as a partner.

As a result, against the backdrop of the current geopolitical situation in 2022, the decision was made to transfer the Tulpar plant to Stadler along with a large order for passenger cars.

Alstom plans to expand its presence in the Kazakhstan and Central Asia market, with one of Stadler’s main development goals being the expansion of its positions in the Central Asian market.

Wabtec is also increasing its presence in this market. Against the backdrop of the strengthening presence of many players in this market, Russian manufacturers are limited by political and sanction pressures.

Overall, the activation of foreign players is caused by external restrictions on the operation of Russian manufacturers in the Central Asian market.

If Russian companies cannot reverse the situation within 1-2 years, they will lose the Central Asian market.

And with the presence of EAEU certificates, foreign manufacturers will enter the Russian market in the medium term.

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