Renault Plans to Conquer Russia With The New And Improved Lada
|   Saturday, May 26, 2012
The last half of century saw the Russian market dominated by the native brand Lada, a car that first came to life under Leonid Brejnev. Only in 2010 did Renault's partner AvtoVAZ stop producing the Lada 2105. The invasion of foreign brands with cars superior from every point of view to the aging Lada finally made the Russians revise their plans. With a bit of help from the French of course.
The French at Renault have every interest to see the Russian market conquered by them and their partners, as this market is the only one where the potential for growth is very high.
Competitors from Ford and Volkswagen know that fact too and are aggressively expanding into Russia's market, as well.
Bloomberg says that the time is right for Lada, the dominant brand on the market, to take up arms while it still can and defend its supremacy. For all its weaknesses, Lada held 29 percent of the market in 2010, and analysts from HIS Automotive say that will drop to 20 percent next year. Even so, support for it remains very strong, due to a dedicated community.

Renault plans on maintaining AvtoVAZ as the number one producer in Russia. The potential of the market is immense. It is expected that by 2014, Russia will overtake Germany as the leading European auto market (not surprising considering the population is twice the size that of Germany's head count). This is expected to happen based on the growing income of Russian citizens.

Well, everything looks good on paper, it remains to be seen how real life will look like. More often than not, plans carefully devised in laboratory conditions have been compromised by the open market. But Renault is forced to succeed, as the rest of Europe does not shows any signs of growing an appetite for cars again. Already, its income has dropped to 9.54 billion Euros in the first quarter, down by 9 percent, while VW has shot up by 26 percent, 47.3 billion Euros, due to massive growth in China, US, and South America.

AvtoVAZ is owned by Renault in proportion of 25 percent, and that is expected to go up to 74.5 percent after a joint venture with Nissan and Russsian Technologies Corp. will invest 750 million dollars in Lada's manufacturer.

Let's hope the company will get back on track and give up the state's help, as well as the barter system wich allowed AvtoVAZ to survive after the USSR collapse.

Bruno Ancelin, Renault's chief responsible for Russia, thinks that after significant improvements to Lada, sales figures will go through the roof. He says that 90 percent of Russians would buy a Lada if the quality level improved; people are quite attached to the brand name.

The joint venture's objective is to hold 40 percent of the market (combined) by 2015, as opposed to 33 percent last year. IHS Automotive predicts Lada will rise to 21 percent market share by 2014, while the Russian Ministry of Industries predicts a the auto market will rise 28 percent by the same year, to 3.4 million new cars sold.
PHOTO GALLERY
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