Renault-Nissan strategy could hinge on Russia’s AvtoVAZ success image

CEO Carlos Ghosn has a lot riding on the success of the Renault-Nissan Russian subsidiary, which needs to elevate the extended alliance to a 40% market share in the country by 2016.

Russia’s biggest automaker, the AvtoVAZ, parent of the Lada brand, was taken under direct control by the French-Japanese company and is part of the maker’s global strategy to reach the top three automakers in the world by 2016. The only problem is that little to no one expected the huge downturn Russia is in today. Analysts see the alliance as one of the few automakers to suffer less from the political and economical troubles the country is in, as it strives to manufacture locally most of its models – including Dacia derived Renaults or the new locally made low-cost Datsun on-Do.

“The Renault-Nissan alliance has always said that it will have a 40 percent share of the car market in Russia. At this time, the group (Renault, Nissan and Lada) has a market share of roughly 30 percent. We have launched many new products and we are on track to realize our targets in Russia, which remain in effect,” says Ghosn.

The deal to take control of AvtoVAZ was only finalized in 2014, three years behind schedule, and the brand still struggles with chronic problems, such as the underutilization of the massive Togliatti plant. The factory only produced 506,000 cars in 2013, around 63% of the installed annual capacity of 800,000 units – well below the 70 to 80% profit threshold.

Via Automotive News Europe