The car plant reduced production plans for 2012

The Ukravto corporation is rapidly reducing production. Yesterday it announced that 18-25% fewer cars will roll off its assembly line this year than planned. This is explained primarily by the introduction of a recycling fee on imported cars in Russia. However, experts note that the company is also experiencing difficulties in the Ukrainian market; its share is being rapidly taken away by importers.

The country's largest automobile manufacturer, the Zaporozhye Automobile Plant, has reduced its production plans for 2012 by 18-25%, to 50-55 thousand vehicles, Oleg Papashev, vice president of the corporation for production, told reporters yesterday. “The final production volume may change. Everything will depend on the consequences of a reduction in car exports after the introduction of a recycling fee in the Russian Federation,” he noted. According to him, ZAZ is currently working to optimize production in order to reduce costs.

Russia is quite an important and largest export market for Ukrainian manufacturers. According to the State Statistics Service, for 6 months. this year, Ukraine exported 13.9 thousand cars to the Russian Federation worth $108 million, with ZAZ accounting for more than 50% of this product. However, after the introduction of a recycling fee in the Russian Federation on September 1, Ukrainian cars rose in price by an average of 10-12%. And given the fact that they are in the lower price segment, sensitive to even small price changes, Ukrainian cars become less competitive than Russian ones.

At the same time, foreign manufacturers are taking away ZAZ's share in the domestic market. According to AUTO-Consulting, in January-August, ZAZ sales decreased by almost 12%, and the market share decreased from 9.7% to 8.1%. At the same time, ZAZ's closest competitors in terms of cost - Geely, Kia, Renault - increased their sales during this period by 83.5%, 51.7%, 8.7%, respectively. The shares of ZAZ's competitors in physical terms increased - for Geely from 2.7% to 4.7%, Kia - from 4.94% to 7.13% and Renault - 5.1% to 5.3%.

Experts believe that domestic manufacturers are losing ground because there are no technologically new models in their portfolio. General Director of AUTO-Consulting Oleg Omelnitsky says that ZAZ, unlike foreign companies, does not update its model ranges very often. “For example, ZAZ Lanos has been produced since 1998, the car has not been able to adequately compete in the market for so long, the consumer always expects new products. According to pan-European standards, car models are updated every 5 years, and ZAZ’s competitors, Kia and Renault, do this once every three years.” , says the specialist. In addition, imported cars that compete with Ukrainian products have a more attractive price-quality ratio, Mr. Omelnitsky believes. “Even with equal characteristics and prices, imported cars are more equipped, which also cannot but affect the consumer’s choice,” adds the specialist.

Andrey Ledenev

ZAZ presses on the brakes

ZAZ presses on the brakes