It is no exaggeration to say that the Taganrog Automobile Plant was at the origin of the large-scale localization of foreign cars in Russia. Moreover, at a certain stage, it turned out to be one of the most effective pioneering projects, surpassing in efficiency a number of similar enterprises, including the Caucasian Derways. Unfortunately, none of these plants are currently operating on the market.
The fate of TagAZ is particularly indicative. The company became a key supplier of Hyundai cars to the Russian market. Moreover, the assembly in Taganrog was carried out with a high degree of localization — an indicator that some modern initiatives could envy even now. However, in 2014, the plant was declared bankrupt, despite the generally favorable attitude of customers to its products. The logical question arises: why was a project that had a solid start and steady demand still curtailed?
The plant started operating in 1998. Its construction was carried out with significant investments and using technologies and licenses from the South Korean division of Daewoo Motors. In fact, the Korean side demonstrated how to enter the Russian market by betting on local production and reducing the cost of cars by producing them on site.
Initially, the assembly of Daewoo models — Leganza, Nubira, and Lanos — was planned on the assembly line. However, the economic crisis of 1998 seriously limited the company's capabilities, and it never reached full capacity. Real development began only in the early 2000s, after an agreement was concluded with Hyundai Motor Company.
In the same period, the production of the Hyundai Accent was launched, which, among other things, was offered with an automatic transmission — a rarity for the budget segment of those years. Later, the model range expanded: the Accent was joined by the Sonata, Santa Fe Classic, Elantra, as well as outdated SsangYong models, including the Tager.
Commercial success was largely ensured by the price advantage. These cars were not advanced in terms of platform, but they were simple, unpretentious, and affordable. For many buyers, this turned out to be a decisive argument, and even today these models retain a circle of fans.
Nevertheless, by 2014, the company was declared bankrupt. There were several reasons for this.
Firstly, from the second half of the 2000s, competition in the budget segment increased sharply. It became more difficult for the Hyundai Accent to compete with the Chevrolet Lanos and Lacetti, Renault Symbol, Nissan Almera, and other models. The difference in price was insignificant, but in terms of performance, design, and equipment, competitors looked more attractive. The buyer's choice gradually shifted towards them.
The Hyundai Sonata was popular with taxi fleets and connoisseurs of affordable comfort for some time. However, over time, it began to be replaced by more modern models — Chevrolet Epica, Kia Magentis, as well as Peugeot 407 and Citroën C5. As a result, sales volumes decreased, which directly affected the financial situation of the plant.
The second factor is the deterioration in the quality of the cars produced. There were increasing complaints about the quality of the paintwork, the metal, which turned out to be thin and prone to corrosion, as well as the electrical equipment. Against this background, Hyundai cars of South Korean assembly were perceived as more durable compared to Russian versions.
The third problem was the change in the production vector. Gradually, TagAZ began to reduce the production of Hyundai models, betting on budget Chery cars. However, the demand for them by the mid-2010s was extremely low, and the financial situation of the company continued to deteriorate.
Major global automakers did not show interest in cooperation with the plant. It was more logical for them to deploy production closer to the administrative centers of the country, where it is easier to solve issues of logistics and selection of qualified personnel. The attempt to create its own product — Tagaz Aquila — was also unsuccessful: the project turned out to be unsuccessful already at the stage of market launch, and the demand for the model was almost zero.
In aggregate, these circumstances led to the logical conclusion of the company's history. The closure of TagAZ can be considered a logical outcome against the background of increased competition, declining quality, and unsuccessful strategic decisions. Nevertheless, the plant demonstrated a high degree of localization and at a certain period really served as an example of successful adaptation of foreign car production in Russian conditions. That is why its departure from the market is perceived as a loss of unrealized potential.