Strong Car Sales in Russia Lead to Significant Investment by Manufacturers

Renault's Avtoframos plant, Russia

The importance of the Russian market to car manufacturers has been underlined following Renault’s announcement that they are to make it one of their international priority markets.

Renault have already seen significant Russian sales in the first half of 2011 with 6% market share, with only Lada and Chevrolet taking a greater share. Russia is Renault’s fourth-largest market – up from 9th place in 2010 – and they have 130 outlets in 86 cities, with every conurbation with a population of over 300,000 covered. The aim is to have 200 outlets by 2013 and 260 by 2015.

The alliance with the leading Russian auto firm AVTOVAZ – alongside Nissan – is paying dividends and car production is predicted to rise to 1.6 million cars by 2016 across the three factories involved. AVTOVAZ produces Lada brand cars, which account for 40% of Russia’s vehicle population and is responsible for 45% of domestic production.

The Renault ‘Logan’ was launched in 2005 and is the first car to be manufactured by the French car company in Russia. It is now the best-selling saloon car in the country and has been joined by a number of complementary models.

It is not just Renault who have seen strong sales growth in Russia, though. The BMW Group saw sales of their cars rise in Russia by 58.3% in the first six months of 2011 while sales of VWs doubled.

In addition to seeing sales double Volkswagen has also joined forces with a Russian car maker, GAZ, to assemble Volkswagen and Skoda models in the GAZ factory in Nizhny Novgorod. The planned annual production target is 110,000 vehicles per year with the first cars rolling off the production line in 2012. The agreement runs until 2019 and will see VW invest €200 million in the factory.

Commenting on the agreement with GAZ Prof. Dr. Martin Winterkorn, CEO of Volkswagen Aktiengesellschaft, said:

“The Russian market is a growth engine for the automobile industry and an important pillar of our Strategy 2018. The quick expansion of production capacity in cooperation with GAZ will significantly strengthen the Volkswagen Group’s position on this key market.”

The Russian car market has recovered since a downturn in 2008-09 with a 30% rise in sales in 2010. Sales continue to grow in 2011 with a 55% increase in the first six months of the year, amounting to 1,235,442 vehicles. The annual total is forecast to rise to 3.6 million vehicles in 2016, making Russia Europe’s biggest auto market.





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