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1 Apr, 2008 02:59

Russian Toyotas jump-start car market

Japan’s biggest carmaker, Toyota, has started selling the first Camry sedans made in Russia, with a 9% price reduction.

As the cheaper cars roll off the assembly line in St Petersburg, it’s predicted the Russian-made vehicles could change the business-car sector.

The Russian made Toyota Camry is an exact copy of the one imported from Japan. But it is $US 3,000 cheaper. a price reduction that will boost sales.

Toyota dealer Yury Semenyuk says the trimmed bottom line will boost sales,

“Starting from Monday, March the 21st, the price is reduced on cars assembled in Russia as well as for those imported from Japan. Toyota Motors stresses that there is no quality difference between the two”, Semenyuk said.

This year, Russian made Camrys will account for 30% of total sales of the model. Imports will make up the remainder. But locally-made cars are expected to substitute Japanese models in two years.

Experts say the reduced price of the Camrys will prompt locally assembled Volkswagen Passat to react.

But Ivan Bonchev, senior manager at Ernst and Young, says a price war is not inevitable.

“It would be interesting to see how Volkswagen will respond to this challenge in a couple of years’ time, when they start series production of the Passat model.

However, considering the scarce supply of vehicles on the Russian market and quite substantial demand, coupled with the price increase in general, I am not sure that all IOM's would certainly reduce there prices,” Bonchev said.

The pricing policy of foreign cars manufactures in Russia will remain the same unless component makers move their production to the country.

But this is profitable only if production capacity reaches 20,000 vehicles per year, a target that may be reached only in the next 5 years.