Renault’s arrival as AvtoVAZ’s partner signals the start of a much–needed renewal for the Russian auto giant. But could this lead to a return to the west for the Lada brand? Not impossible, as Mark Bursa discovers.

Not so long ago, the Lada brand was something of an export powerhouse. Sure, the Soviet cars were heavy and unreliable, and they attracted their fair share of attention from stand-up comedians – though Skoda drew a fair amount of the flak!

In the UK alone, around 350,000 Lada cars were sold between 1977 and 1997. All of them passed through a massive rectification centre at a small town called Carnaby in Yorkshire. At its peak, 300 cars a week passed through the centre, which was run like a production line, effectively upgrading Russian-spec models for UK tastes.

Grilles, badges, trim and wheels were replaced. Stereos, sunroofs and much-needed go-faster stripes were fitted. Even custom body-kits were added, in a bid to disguise the cars’ humble origins. The Carnaby centre ran for 20 years, before imports finally ended in the wake of post-Communist problems at Togliatti.

Eleven years on, the question of whether Lada could ever make a comeback as a global brand has made it on to the agenda again. There’s an up-beat atmosphere at Togliatti following the deal with Renault that will allow the company to upgrade and modernise its plant and its range. But the export issue is quite a prickly one – it’s not easy to get a straight answer. Maybe, but it’s not a priority, say Renault execs. Why not, say the AvtoVAZ people.

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You might imagine that Renault might not be too keen on seeing Lada-brand cars again flowing into the budget end of the West European car market. As much through luck as through judgement, Renault has a major success story on its hands with Dacia. The Logan, aimed at emerging markets, has proved a hit in the developed world too – after Romania, the biggest markets for Dacia were France and Germany in 2007.

So you’d imagine the last thing Renault wants to see is a better-known brand entering the same segment, selling cars based on the same technology. Surprisingly, this is not the case.
While Renault is focusing on the immediate problems, it’s actually keen to maintain AvtoVAZ’s existing European footprint. And while the Lada brand may have faded away in the post-communist days in many markets, such as the UK, it has soldiered on in some other major markets, including France, Italy and Germany, with independent distributors maintaining a low-key presence in these markets.

“We are looking at how to maintain European sales in major markets such as France, Germany and Italy,” says Yann Vincent, the Renault executive who is now an AvtoVAZ executive vice-president. “At the moment, the priority is the CIS, but we are not saying we won’t come back to Europe in the future.”

Volumes are small, but AvtoVAZ is proud of the international profile its European presence gives it. Through thick and thin, AvtoVAZ has maintained a presence at the major European motor shows too – just so we know it’s still around.

In France, Lada sells a limited model range: a 1.6-litre Kalina hatchback, 1.6-litre 111 hatch and 112 wagon, plus four versions of the old 1970s Niva, now sold as the Lada 4×4 as ownership of the Niva name passed to Chevrolet under the AvtoVAZ-GM venture. The Kalina is priced at €7,990 – pretty much head-on with the Dacia Sandero, which starts at €7,800.

Any return would be dependent on product, of course. For the moment, the Euro 3-engined Ladas can be sold in Europe, but as emissions standards tighten up, they’ll need new engines. And any attempt to mass-market Lada cars would require full-scale EuroNCAP crash testing – and it’s unlikely the current models would get many stars.

Russia is moving to Euro 4 emissions standards in 2011, but there’s no deadline for Euro 5. Euro 4-compliant Renault engines will be fitted to AvtoVAZ models by 2011, but by then we’ll be on to Euro 5 in Europe – so Russian cars will be behind the curve for some time.

Nevertheless, those European distributors are going to want some of the new AvtoVAZ models – especially those new derivatives of the Lada C platform, such as the 2116 hatchback and the C Crossover – even if they won’t be the cleanest cars on the road.

But they also won’t be the cheapest. AvtoVAZ is pitching them toward the top of the C segment in Russia – the target is the Ford Focus, built in St Petersburg and selling in growing numbers. They would be bigger and more expensive than the Dacia range, which will only ever be built on a single, B-segment platform. So it’s likely that a European Lada brand based round C-platform cars would not be competing head-on with Dacia.

It also must be factored in that a return to Europe may not be Renault’s call. Renault is only a 25 percent shareholder in AvtoVAZ, and while that 25% has disproportionate influence, it doesn’t stop AvtoVAZ running its business the way it wants.

AvtoVAZ president Boris Aleshin clearly has one eye on exports, but he’s pragmatic about the prospects. “I don’t think you can expect miracles,” he says. “300,000 exports would be practically impossible.” But he believes a target of 30,000-40,000 sales “would be an important target”.

Of course, this doesn’t necessarily mean a European target. Instead, rather like the Chinese, AvtoVAZ is prepared to do business with other emerging markets – such as Algeria and Egypt, where it has CKD operations.

“We are planning exports to CIS, Africa, Latin American and Middle Eastern markets,” says Aleshin. “We want to maintain and increase sales in post-Soviet cultures. Our cars also sell well in Egypt, and we will take the opportunity to take cars into African markets. Yann Vincent is also enthusiastic about helping the Lada brand develop in the emerging markets. “It would be possible to build Lada cars at some of the Renault–Nissan Alliance plants around the world,” he says.

Even China is on Aleshin’s radar – AvtoVAZ is “looking at ways of working with Chinese automakers”, but this appears to be more of a defensive strategy. The clear and present threat to Russian automakers is Chinese entry to the Russian market. Aleshin believes these efforts have “failed” – but even in Togliatti, Chery has a large dealership on the ‘motor mile’ leading into town. And other Chinese brands are also present, and AvtoVAZ is monitoring them closely, he says.

See also: EMERGING MARKETS ANALYSIS: Renault’s mighty task – fixing the Togliatti timewarp

EMERGING MARKETS ANALYSIS: Fixing AvtoVAZ starts with new product