Avtovaz eyes foreign markets as domestic sales drop

Russia's biggest carmaker Avtovaz is pinning its hopes on a surge in demand from CIS countries after exports jumped 50% in the first quarter, though its domestic sales saw a sharp decline.

Avtovaz said the share of Lada cars in the Kazakhstan and Ukraine markets is growing, so the company plans to cash-in on higher demand.

“We forecast further growth of sales in Kazakhstan with joining the Customs Union,” the head of Avtovaz Igor Komarov told RT. “We are trying to stimulate sales and make special programs to promote our cars at this market. We forecast export sales of almost 70,000 cars, which may increase 20-25%”.


However, the first quarter wasn’t the best for the car maker as domestic sales of its Lada cars fell 14%. This led to a 9 fold decrease in profits comparing to the same period of 2011.


 The head of Avtovaz said sales dropped as the government scrappage scheme finished and was foreseeable. “A substantial part of our shares was the utilization program. In the first quarter of last year we had about 50% of our sales from this program,” Mr Komarov said.


The scrappage scheme brought Avtovaz about $31.7 million profit in the 1Q of 2011, while the 1Q of 2012 resulted in $3.8 million.


Meanwhile Avtovaz doesn’t intend to increase domestic sales next year, but plans to focus on launching and promoting its new models including the Lada Granta and Lada Largus as well as on modernizing production.


Avtovaz also plans to complete the sale of a 25% stake to Nissan-Renault. By the end of the year Avtovaz will start manufacturing Nissan cars at its facilities.