Russia’s Lada parent AvtoVaz to profit from rival carmakers deserting the market image

AvtoVaz, the largest automaker in Russia, and owner of the derided but top-selling Lada brand, is set to profit and take a much larger market share as international competitors are scaling down their presence.

The collapsing domestic auto market has been hit by the prolonged economic slump and the massive downturn brought by the falling local currency – bringing car sales to low levels unimaginable just a few years ago. This week the largest US automaker, GM, announced it would close of its Russian factory and slow down the presence of its Opel brand. Other major carmakers have also cut down local production, increased prices and ceased to import certain models after the recession kicked in back in 2013. Now the economic slump ahs been deepened by the low price of oil – Russia’s main export asset – and by the western economic sanctions stemming from the country’s implication in the Ukraine conflict.

Avtovaz President Bo Andersson believes that Lada is the exact brand needed by Russians during the crisis. “Our job is not to compete with the main international producers,” he commented during the Russian Automotive Forum in Moscow. “The important thing is that in the economy sector we must be competitive – and we can be competitive.” The carmaker, now controlled by the Renault Nissan alliance, predicts sales could rise enough to increase the brand’s market share from 40 percent today to 50 percent in the near future. The automaker also felt the pain of the economic downturn though – its losses for 2014 rose to 25 billion rubles and also had to increase prices because of the currency’s plunge.

Via Reuters