| AvtoVAZ is trying out the Far Eastern market AvtoVAZ is not abandoning plans to build a plant in the Primorsky Territory and displace the used Japanese foreign cars that dominate the Far East. As Anatoly Melnikov, chairman of the production council and member of the board of directors of AvtoVAZ, told the Far Eastern agency Data.RU yesterday, “the company is considering the option of building a car assembly plant in Ussuriysk.” This city, located 100 km from Vladivostok, was chosen, according to Mr. Melnikov, because “there are free trained personnel” there. Mr. Melnikov did not specify the details of the project, explaining that “no documentation, including financial, has been prepared yet.” Ussuriysk is home to the largest car market after Vladivostok, and unlike the capital of the region, you can buy Soviet and Russian-made cars here.
However, the press service of AvtoVAZ, citing the company’s management, did not confirm Mr. Melnikov’s statement to Vremya Novostey. However, even from his words it is difficult to understand whether we are talking only about intentions or about a specific project. Most likely, AvtoVAZ has not yet determined the most important thing for itself: how profitable such a project can be.
It is known that the Far East market is carefully studied by AvtoVAZ experts. For the first time, ex-general director of the plant Vitaly Vilchik announced plans to begin “expansion of his cars to the Far East” back in November 2002. At that time, the plant was experiencing a sales crisis and was in dire need of new markets. True, in Togliatti they recognized that it would not be easy to compete with the predominant used foreign cars in the Far East, primarily Japanese ones. Including due to high transport costs. While shipping a car by ferry from Japan cost only $100, transporting a VAZ car, according to Mr. Vilchik, cost at least 14 thousand rubles.
AvtoVAZ’s first step towards conquering distant frontiers was the introduction of uniform selling prices in all regions of Russia since April last year (the average transport costs for the country were initially included in the selling price). The unification of customs duties on cars aged three to seven years for individuals and legal entities, introduced by a government decision last July, should also have played into the hands. As a result, the cost of customs clearance of used foreign cars has increased by about a third.
Just after the equalization of duties, the governor of the Primorsky Territory, Sergei Darkin, first announced that AvtoVAZ was studying the possibility of creating an assembly plant in Primorye, adding that Togliatti residents intend to “come to the region to calculate the economic effect of the construction of the plant.” However, AvtoVAZ on the same day hastened to refute the statements of the Primorye authorities, saying that “no negotiations were held on this matter and no decisions or business plans were made.”
Meanwhile, Tolyatti continued to make attempts to strengthen its own positions in the Far East. Over the past year, AvtoVAZ opened regional sales departments in Blagoveshchensk, Khabarovsk and Vladivostok. And in order to attract the attention of consumers, VAZ workers even organized the “Far Eastern Route” campaign last summer - a two-week run of VAZ cars from Blagoveshchensk to Vladivostok. However, last year in Primorye the share of the domestic automobile industry accounted for only every two hundredth car (in Kamchatka, only one “ten” was registered). And according to the general director of the official AvtoVAZ dealer Dal-Lada, Mikhail Tikhonov, during the eight months of this year, only about 200 VAZ cars were sold in the Primorsky Territory. This is despite the fact that AvtoVAZ sells about 12-14 thousand cars every month in Moscow alone.
“AvtoVAZ could sell more in the Far East, but so far it is not doing enough for this,” believes Uralsib expert Vyacheslav Smolyaninov, who, however, is not sure that this requires organizing assembly production on site. “I don’t yet see any economic efficiency in supplying vehicle kits to this distant market instead of finished vehicles,” agrees Aton vice-president Alexander Agibalov.
However, it may seem that the attempts of domestic manufacturers to gain a foothold in the Far East, where Toyota has long been the people's car, are doomed in advance. You don't have to look far for examples. As Mr. Melnikov said yesterday, Chevy Niva SUVs at a price of 285 thousand rubles may appear on the Primorye market in the near future. However, it is unlikely that local residents will prefer a VAZ SUV to, for example, a Toyota RAV4, which, although manufactured in 1998, costs the same. Yana GODOVANAYA |
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