Lada faces risk of losing top spot in Russia as major competitors enter

Article by Christian A., on May 24, 2012

Lada is facing pressure in defending its position as the long-standing dominant brand in Russia, as major vehicle manufacturers enter into the market. With Volkswagen and Ford expanding their operations, and AvtoVAZ dismissing older car models, the share of Lada in the Russian vehicle sales is estimated to fall to 20% in 2013 from 29% percent in 2010, the data from IHS Automotive revealed.

The Russian customers' shifting loyalties threaten an expansion plan of Renault-Nissan to control Lada-maker AvtoVAZ in an effort to dominate a market poised to be the biggest in the European region by 2014, when it is predicted to increase 28% to 3.4 million automobiles, the country's industry ministry stated.

 Buyers such as child psychologist Olga Sorokina do not want to own a Lada any longer. She already has a range of options today, unlike in the past. Sorokina shared that she is considering an Opel Corsa, after having to fix "almost everything" from the transmission to the mirrors on her 2006 Samara sedan. The deepening partnership of Renault-Nissan and AvtoVAZ has not won her Sorokina over. She related that she is "a bit skeptical."

Moreover, she shared that she would consider an automobile manufactured by the Togliatti-based automaker only after "positive feedback," even if it is being marketed as a Renault. Analyst Erich Hauser at London-based Credit Suisse commented that it is "just about the only white spot on the world map that's left for Renault to grow." He explained that although they are purchasing the "biggest guy in the room," there are "a lot of uncertainties in the deal."

He also stated that for the time being, rivalry is not getting any easier. In 2011, Ford entered into a joint venture with OAO Sollers, which is the third biggest automaker in Russia. The partnership will manufacture Explorer SUVs and other models. Ford has the capacity to produce 125,000 Focus and Mondeo units annually its St. Petersburg factory. [source: Autonews]

Topics: lada, russia

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