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7 Apr, 2008 13:58

Beginning of the end for Lada cars?

Russia’s largest car manufacturer, Avtovaz, has increased its domestic sales by 20% since the beginning of this year. Lada models have once again become competitive mainly due to their low price, but sales volumes are still lower than two years ago.

One hundred and forty five thousand cars – Avtovaz hasn’t sold this many since 2006.

Andrey Belyaev, a new Lada 2113 model owner, says he prefers the Russian car to the Chinese alternative.

“There are problems with spare parts for Chinese cars of the same class. Even if the car is under warranty, you will have to wait quite a while for the parts to arrive. With Russian cars there is no such problem,” he said.

But market watchers say that consumer psychology is changing. They now think not where to find the spare parts, but how often they will have to look for them.

So Avtovaz’s sales remain lower than 2006 and even the recent teaming up with Renault isn’t helping much according to experts.

“The first model the joint-venture decided to produce was a seven-seat minivan based on the Renault Logan. This car is similar to the one produced for example in India,” says Eduard Faritov, a senior analyst from Russian investment bank Renaissance Capital.

“The logic the company gave as to why they chose this model is really discouraging. They say they didn’t want to cannibalise any of the existing ones either on the Lada or Renault sides,” he said.

This logic wont’ save Avtovaz analysts believe.

Experts predict that if Avtovaz doesn’t go for market share more aggressively, it’s likely to continue losing market share at a rate of 10 % a year.