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Foreign Cars Attack
// Summer on the Auto Market Promises to be Hot
Demand
The most optimistic forecasts for new foreign car sales came true in the first quarter of this yearlast year's leaders improved their results by another 1.5–2 times. Sales have begun to improve for domestic car manufacturers as well. If the market keeps on growing at these rates, the stock of new foreign cars will increase by 300 000, and sales of Russian cars will be at least as much as last year.
Japanese Hotcakes
A total of 1.5 million cars were sold in Russia last year, including about 196 000 new foreign models (more than 210 000 counting “gray” imports). This year, analysts are sticking to more cautious forecasts of 230 000 new foreign cars. Everyone is worried that the rush of effective demand is about to dry up. However, the first-quarter results show that demand has still not peaked.
The buying boom on the auto market is continuing, and the leaders remain the same as before: Toyota, Ford, Uz-Daewoo Auto, Hyundai, Kia, and Mitsubishi. Mikhail Bakhtiarov, president of Major Auto, estimates that demand is continuing to increase for cars in the $15 000–20 000 price range. Rolf Holding (Mitsubishi importer) confirms this, although at this company they are saying that results for January and February might have been even better if buyers had not cleared away long-term inventories in December. When deliveries resumed in March, Rolf sold 2000 cars.
Despite the fact that quotas for this year have increased significantly, nearly all dealers are facing car shortages. You now have to wait an average of three months for the most popular models in the dollar sector. Models in especially short supply are impossible to buy even by knowing the right people; for example, the entire year's quota on this season's novelty, the Mazda 3, has already been spoken for.
The main trend at the beginning of the year was an erosion of the boundaries between the auto market's two foreign currency sectors. Last year, nearly all Japanese and Korean car manufacturers (except for Nissan), as well as General Motors (Opel, Saab, Chevrolet, Cadillac), sold their machines in dollars. The remaining European and American manufacturers and the GM-AvtoVAZ joint venture (Chevrolet Niva) operated in the euro sector. Sales of dollar-priced foreign cars nearly tripled last year, while the euro sector increased 15–20%.
In January–February, sellers in the euro sector did everything they could to win back customers. At the same time, several manufacturers announced a switch to payments in dollars. Nissan and Volkswagen converted their prices at the rate of €1 = $1.15, while Audi used a rate of €1 = $1.19 ($1.21 for the Audi A8). Land Rover also set new dollar prices. They did not have to wait long for results. Audi's sales increased 1.5 times in January–February compared to the same period the previous year. A flexible exchange policy also had an impact on last year's outsider, VW: after the switch to dollars, sales nearly doubled. The Czech manufacturer Skoda is the latest one to take this step. At the end of last year, customers nearly stopped buying these cars because of the high prices in euros, and large importers stopped deliveries of Skodas in January. Only 14 Skodas were sold in February.
Sellers in the euro sector are also consistently lowering their prices, as well as carrying out special actions and offering more favorable car-buying plans. For example, as of April 1, ZAO DaimlerChrysler Automobiles Rus lowered its prices by up to €5000 on Mercedes Benz C class cars and by €3000 on E class. Prices for other Mercedes models also decreased. BMW, the main competitor of Audi and Mercedes, has not converted prices from euros to dollars, but has gambled on assembling its leading 300 and 500 model lines in Kaliningrad. The new BMW 525 and 535 models produced at the Avtotor Factory went on sale in early April. They cost about as much as these same models made in Germany cost last year.
Meanwhile, Russian car manufacturers are thinking about converting prices to rubles. Due to the unstable dollar rate, prices for their products have decreased in ruble terms. For now, only the Chevrolet Niva is priced in rubles. After last year's jumps in the price of this off-road vehicle (first dollars and then euros), the Samara joint venture finally managed to win back the trust of its customers.
Our Models Make a Comeback
This year began fairly well for Russian auto plants as well. Whereas a year ago, they spent nearly all of January on forced leave and dealers tried mightily to sell production left over in warehouses from 2002, this year nothing is stopping them from selling their cars. Increased duties on used foreign cars introduced in the middle of last year persuaded some buyers to remember their domestic industry. For example, AvtoVAZ produced 110 000 cars in January–February, or 44% more than in the same period last year. And AvtoVAZ's domestic retail sales amounted to about 100 000 cars, or 11 000 more than a year ago.
Two new productsthe UAZ Hunter (an updated GAZ) and a restyled Volga GAZ-31105appeared on the market for domestic models in December and January. Andrei Dorofeev, director of marketing and sales at the Ulyanov Automobile Plant (UAZ), forecasts that thanks to the Hunter, sales of UAZ off-road vehicles will increase 10–20% in the first quarter. Volga has also shown an unexpected increase in sales. Vladimir Torin, head of the public relations department at Ruspromavto [the company manages the Gorki Autmobile Plant (GAZ)], links this not only to modernization of the Volga, but also to a reorganization of production at GAZ, which has resulted in fewer rejects.
| Sales of New Cars in Russia
|
| Model |
Sold
January-February 2004 (number of cars) |
Sold in 2003
(number of cars) |
| Alfa Romeo |
32
|
201
|
| Audi |
535
|
3111
|
| BMW |
516
|
3774
|
| Cadillac |
14
|
41
|
| Chrysler |
43
|
429
|
| Chevrolet* |
153
|
605
|
| Citroen |
423
|
2739
|
| Daewoo |
í.ä.
|
20255
|
| Fiat |
13
|
103
|
| Ford |
3175
|
20712
|
| GAZ |
24044
|
56783**
|
| Chevrolet Niva |
5703
|
21759
|
| Honda |
649
|
3574
|
| Hyundai |
3412
|
14561
|
| Jaguar |
17
|
172
|
| Jeep |
42
|
332
|
| Kia |
2515
|
12420
|
| Land Rover |
216
|
1582
|
| Lexus |
402
|
1397
|
| Mazda |
535
|
1862
|
| Mercedes-Benz |
382
|
3205
|
| Mini |
15
|
128
|
| Mitsubishi |
2203
|
17663
|
| Nissan |
1627
|
9470
|
| Opel |
1476
|
7318
|
| Peugeot |
926
|
8782
|
| Renault |
1791
|
11357
|
| Rover |
71
|
347
|
| Saab |
35
|
375
|
| Seat |
4
|
250
|
| Skoda |
243
|
6678
|
| Ssang Yong |
28
|
168
|
| Subaru |
389
|
1272
|
| Suzuki |
753
|
4044
|
| Toyota |
5152
|
25075
|
| UAZ |
8532
|
32748**
|
| VAZ |
99937
|
699899**
|
| Volvo |
463
|
5027
|
| Volkswagen |
908
|
6335
|
*Chevrolet Niva not considered.
**Produced
in 2003.
|
Ekaterina Safarova
All the Article in Russian as of Apr. 15, 2004
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Photo: Vasily Shaposhnikov
