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Foreign Cars vs. Russian Car Manufacturers
March 22, 2007 16:42

A new foreign car for a common Russian citizen is the evidence of prosperity and a steady well-paid job. That is why Russians prefer Fords, Toyotas and Mitsubishi to domestic Ladas and Nivas and the results of the recently conducted survey prove this idea.

Last year Ford was an undisputed leader among the most popular foreign cars– over 22 thousand automobiles were sold in Russia. The second position is occupied by Chevrolet – over 20 thousand cars. As for third place, Toyota with 16 thousand cars can be found there. On the whole, the foreign cars sales volume increased by 81% up to 167 thousand cars compared to the results of the previous year.

While the demand is growing, foreign players are gradually joining the campaign for Russian consumers. Thus, a new plant owned by General Motors will start working in 2008 under St. Petersburg. The plant is going to produce off-roaders Captiva and C class sedans priced at prior $15 thousands. The plant will produce 100 thousand cars annually, says Peter Foster, the head of the European department of the company. Additionally, it should be mentioned, that the JV GM-AvtoVAZ is planning to extend the model line, as presently the enterprise manufactures only two models: Chevrolet Niva and Chevrolet Viva.

 Other Russian automaker companies keep pace with AvtoVAZ. E.g. recently Russian Ministry of Economic Development and Trade and Russian GAZ Group, the Russian biggest manufacturer of commercial motor-cars and trucks, have signed an agreement on industrial car assembly on the basis of Chrysler Sebring and Dodge Stratus. The agreement concluded for the five-year period will let GAZ Group import car components at low customs rates (0-3% instead of current 5-15%). GAZ group is ready to invest over $130mn in the project. The company plans to organize the complete technological cycle including body fabrication, painting, assembly and product testing. First cars will be released in February of 2008 with 25 thousand cars planned to be produced before the end of the year. In 2009 the manufacturer is going to produce 40 thousand cars and the next year – 65 thousand.

On the whole, seven more foreign car-making plants will be built in Russia within the next three years and the total number of foreign cars produced inland will exceed one million automobiles a year.

However, there are different ways to attract customers to the production; E.g. Mitsubishi resorted to the unpopular dumping method and announced prices on spare parts for Japanese cars 33% cut. Considerable reduction of the sales volume made the company make such a decision.

Thus, foreign cars go ahead while Russian car manufacturers fall back. Such car models as LADA are losing their popularity with every passing year, as now they are bought only in the Central part of the RF – the Far East was lost for the Russian car manufacturers long ago due its remote location and Japanese competitors supplying the Region with used cars.

Russians choose reliable and comfortable foreign automobiles as, unfortunately, our domestic manufacturers cannot produce good inexpensive cars and this tendency is unlikely to change in the nearest future.


Olga Pletneva

Tags: Russian Car Manufacturers Russian companies    

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