MOSCOW. (RIA Novosti political commentator Alexander Yurov) - Russian dealers of major world car manufacturers recently told the world of their achievements. In the first half of 2006, they said, almost 400,000 foreign cars were sold in Russia.
That compares with 575,000 vehicles sold in all of last year. If the current pace of sales keeps up until the end of the year, 2006 will set a new record.
However, these achievements look somewhat lackluster when set against the sales of AvtoVAZ, the main producer of Russian cars. In 2005, it was able to sell more than 700,000 vehicles. Sales continued to grow in 2006 as well. In the first half they went up by 3%. Yet the figures for overseas companies cannot be overlooked. Some foreign producers increased their sales in the first six months of 2006 by 200% year on year. Of course, only a few have posted such results. Among them are Chevrolet (219%), Renault (190%) and Kia (188%). Others had a more modest showing, but even they had booming sales.
Sales rose in the first half of 2006 in practically all price segments of the market. Mercedes, for one, reported sales that were twice as high as last year, while BMW posted a gain of 150%. Citroen, Ford, Skoda and Mazda nearly doubled their sales. Other car makers also chalked up good results: Toyota and Mitsubishi increased sales by almost 40%, Nissan by 50%, and Peugeot by 45%. Sales for Hyundai and Daewoo were not as vigorous, yet in the first half of the year Russians bought 10% more these makes.
The share of foreign cars on the Russian market is growing slowly but surely. Russian analysts say that this year for the first time foreign models have begun to outprice Russian makes in the inexpensive segment. This year's front-runners, Chevrolet and Renault, have increased their sales by introducing low-priced models, the Lanos and the Logan. They are being sold at prices close to that of the Lada.
Even so, it will be a tall order to force Russian cars out of the $10,000 car segment. By 2010, Russia plans to release 12 new car models, all equipped with locally produced engines.
AvtoVAZ recently announced it was going to build a new plant. It will manufacture more than 600,000 engines a year, and its construction cost is estimated at $500 million. The Russians gave up on the initial idea of buying a functioning production facility abroad and moving the equipment to Russia. DaimlerChrysler, Fiat and Renault were mentioned among partners, but plans have changed. Now AvtoVAZ will be developing its own engine, though with foreign help.
The company is cautious when naming its future partner, Porsche, which once helped the Russians develop a new model. Cooperation between the Russian and German companies goes back to the late 1970s and early 1980s.
It appears, however, that the decision to develop Russia's own high-quality and modern car was well thought out. Almost at the same time as it made its decision to build an engine plant, AvtoVAZ refused to form a profitable alliance with Renault: the French company offered to let AvtoVAZ produce the Renault Logan in Tolyatti in exchange for a 25% stake in the Russian firm. The annual target was to have been 450,000 cars. But although talks on possible cooperation between Renault Logan and AvtoVAZ began a long time ago, the management of the Russian enterprise made up its mind to produce its own models. It claims that selling such a big chunk of shares to a foreign company would mean losing control of the Russian car market. Yet the Russian auto giant still accounts for more than half of all cars sold in the country. Although the deal fell through, engineering contacts with Renault are likely to continue. The management knows French expertise will come in handy for developing a new engine for the Lada family of cars.
But then again, the Russian auto market still has two or three years in which to experiment. An expert forecast of this year's sales is 2.5 million cars. For the time being only half of the Russian demand is met by new Russian and new foreign cars. The other half is met by used Russian and foreign vehicles. As long as there is a market for used cars, fierce competition in Russia is still a long way off.
The opinions expressed in this article are those of the author and may not necessarily represent those of RIA Novosti.
