The series of future models insights for the brands of Groupe Renault and Nissan Motor continues with a look at what’s ahead for Lada. After the recent reports on Alpine, Renault and Dacia, after Lada will come insights into what’s ahead for Samsung, Datsun, Venucia, Nissan, Infiniti and Mitsubishi.
AvtoVAZ Group (AVG) continues to see a major lift in sales, revenue and operating margin. Most recently, the firm’s balance sheet benefited from a necessary restructuring with a 61.4 B-RUB debt-to-equity conversion by shareholders Groupe Renault and Rostec.
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By GlobalDataLada had a major sales rise in the first quarter of CY2018, selling 79,114 cars in Russia, a year-on-year gain of 28.8 per cent and an especially good result compared to the 21.7 per cent rise for the overall market. The brand remains in first place at home, with a combined share of 20.1 per cent including both passenger vehicles and light commercials.
The Vesta Sedan, SW, SW Cross and what the company terms to have been “effective governmental market support measures” are the major drivers of the brand’s recovery. The Vesta, Granta and Largus were all in the top ten during Q1.
AVG’s exports were up by 25.1 per cent to 7,861 cars in Q1. Lifting this area of the business remains a major challenge for the company. While its labour costs might be minimal compared to what OEMs pay workers in Europe, it is hard to see how Lada vehicles can seriously challenge the likes of Volkswagen, Groupe PSA, Renault and Fiat in their main markets. For now, AVG’s top export destinations are Kazakhstan (SKD kits are sent there), Belarus, Germany, Austria, the Czech Republic and Lebanon. Tunisia and Chile are two additional markets which the Lada brand will enter this year.
Returning to the monetary picture, in Q1, consolidated revenue of 64.8 B-RUB was a 40.8 per cent gain on the year earlier period. Operating margin amounted to +1.8 B-RUB vs -0.9 B-RUB last year, while the net result improved by 3.4 B-RUB compared to Q1, 2017, reaching 0.6 B-RUB.
Nicolas Maure, the president and CEO of PJSC AvtoVAZ, sounded a note of warning in late April. “I must underline the risks that may influence our future performance. Significant forex fluctuations in the beginning of April 2018 might negatively impact the Russian automotive market and financial results later this year. We intend to keep the highest localisation ratio in the Russian automotive industry (86 per cent), continue [to] optimise both variable and fixed costs and further develop the Lada model range to overcome these headwinds,” Maure cautioned.
This is the last month for the current head of the firm, Yves Caracatzanis having been announced as the next CEO in April. His move from the position of managing director of Groupe Renault in Romania becomes effective on 1 June. Nicolas Maure will, Renault notes, “continue to monitor the financial recovery and the mid-term plan development of the company as Groupe Renault senior vice president and chairman of the Eurasia region. Maure also retains a role within AVG too, having become vice-chairman of AvtoVAZ’s board of directors on 2 April.
The Lada range – low prices and strong design
Lada’s range, which is full of the models which the market remains keen on – low-priced small cars and crossovers – is doing especially well and the brand remains in first position. Second placed Kia is a long way but AvtoVAZ and Renault need to be alert to the dangers from the Korean firm, as its models are in many cases much younger than what Lada offers.
Part of the Renault-Nissan-Mitsubishi Alliance, AVG uses Renault-Nissan powertrains and platforms, modified and/or strengthened for the extreme conditions of the local market. The company operates out of two main production locations. The legendary and vast Togliatti manufacturing complex is one of the world’s largest car plants by square footage. It produces not only Lada models but also Renault, Nissan and Datsun models. The complex has been greatly down-scaled but its annual capacity remains at one million vehicles. The Izhevsk factory, meanwhile, builds certain Lada and Nissan small cars.
Current and future models
The original Niva from the 1970s, now renamed, is still available in three- and five-door form. Russia remains the main market. The 4×4 Urban, a facelifted and renamed model had its world premiere at August 2014’s Moscow motor show. In some markets, variants are also known as the Taiga.
A replacement model has been delayed many times. It is now due in the second half of this year. In January 2016, AvtoVAZ transferred production of the 4×4 to the same line at Togliatti which was already building the Priora.
The Priora is the second oldest Lada model still on sale after the 4×4. The 2110, which dates to 1997, was a range which once comprised a four-door sedan (2110), wagon (2111) five-door hatch (2112) and three-door hatchback. All were available with eight and sixteen-valve variants of a 1.5-litre engine. Only the sedan, which started life as the VAZ 2110, remains in production.
Production of a facelifted version started in November 2005, at which time a model name change to Lada Priora also took place. This model debuted at the 2003 Moscow show as the VAZ 2170 and then in near-production form as the Priora at the August 2004 event. The final-spec cars then appeared at the same event in August 2005.
The Priora was facelifted again in April 2007. The standard engine became a 72kW 1.6-litre. A three-door hatchback variant, the Priora Coupe, was launched in Russia in early 2010. This has since been discontinued so now only the sedan remains. Production of this extremely cheap car (from RUB382,410) is expected to end later this year.
The Granta had its global debut at the Moscow motor show in August 2011. Production started three months later, with cars reaching Russian dealers in December 2011.
This 4,260mm long sedan, Russia’s second best selling car after the more modern Vesta, uses the same platform as the second generation Dacia/Renault Logan. The Granta was the first model to be built at the IzhAvto plant which AvtoVAZ bought during 2011, assembly commencing in June 2012. The Granta Liftback was revealed at an event in St Petersburg in May 2014.
The next generation Granta and Granta Liftback are due to be released in 2021 and 2022 respectively. Before then, both of the existing cars should be facelifted; most likely during the third quarter of this year.
The X-Ray (development code: BGA) went into production in December 2015, with HGA, the X-Ray Cross (to be distinguished by a suspension lift and plastic wheelarch extensions), due to be added by the end of this year. These small cars were previewed first by the Lada C-Cross concept at the Moscow motor show in August 2008, then by the XRAY concept at the 2012 show, the XRAY Concept 2 at August 2014’s Moscow show and the XCODE concept at the 2016 Moscow motor show. The first X-Rays were in Russian showrooms in February 2016.
Renault and Dacia’s B0 platform is used for this small crossover. The X-Ray will likely have a facelift in 2020. The next generation X-Ray and X-Ray Cross are due out in 2023.
AvtoVAZ began building the Vesta, a 4,410mm long sedan, at the Izhevsk plant in the Western Urals in September 2015. The car was then introduced to the media during the following month by the then CEO Bo Anderrson and Russian president Vladimir Putin. Sales commenced in November 2015.
This was the first car for the Lada B platform. This architecture is believed to be based on a Renault-Nissan platform.
There is also a wagon, the Vesta SW, and Cross (crossover) versions of both body styles. The Vesta Cross was revealed in concept form at August 2015’s Moscow Off-Road Show. The production model, the Vesta Cross SW, became a derivative of the SW, both of these being launched in the Russian market during October 2017. The Vesta Cross (sedan) was then announced last month and is now going on sale.
The second generation Vesta series is due for release in 2023. These three cars will likely use an updated Lada B platform. There is also a chance that AvtoVAZ might instead gain the Alliance CMF C/D architecture which will no longer be state of the art by then, and therefore suitable for a budget brand such as Lada.
The Kalina is another small car. It is available in four forms: 3,893mm long hatchback and Sport, plus 4,083mm long SW and Cross. The second generation model had its world premiere at the Moscow motor show in August 2012. The five-door hatchback and wagon were both there and went on sale in Russia from June 2013. Production commenced during the previous month. The Granta can be thought of as a Kalina sedan.
This Kalina Cross was revealed at the Moscow motor show in August 2014 and went on sale in Russia during the following month. It is powered by a 1.6-litre four-cylinder petrol engine. There is another model which is more or less the same car, but without the raised suspension of the Cross. This is the Kalina SW (station wagon).
The On-DO, the first Russian-made model for Nissan’s revival of the Datsun brand, uses the same platform as the Kalina. It is manufactured by AvtoVAZ at the same Togliatti works as the Kalina.
The final model in the Lada line-up is the Largus. This C segment wagon is based upon the first generation Dacia/Renault Logan MCV. Production commenced on a new line at the AvtoVAZ plant in Russia in March 2012.
The Largus had its global debut at the Moscow motor show in August 2011. There are both delivery van (Largus wagon) and seven-seater (Largus Universal) passenger variants. As for the Largus Cross, this is the wagon with protective grey plastic on the bumpers, around the wheelarches and on the side sills. It premiered at the Moscow motor show in August 2014, going on sale in Russia three months later.
The second generation Largus Universal should go on sale in Russia in 2020. Only minor updates are expected between now and then.
Why Lada needs a model like the Nissan X-Trail
What about additional models, and in particular SUVs? AvtoVAZ is not unaware of market trends and if it is ever to become a serious exporter, a range of crossovers and SUVs in the A, B, C and D segments will be needed. The company’s thinking was in evidence at the 2016 Moscow motor show. This was where the XCode concept was first seen. The design study will hopefully prove to have been a preview of a C segment SUV which would have the added and crucial benefit of lifting Lada pricing into the air above where it presently competes.
No official statement about building a vehicle similar to the XCode has been made but it is an open secret that a future Lada along these lines is under development. Expect to see it reach production at Togliatti by 2020. After that, a D segment SUV around the same size as the Skoda Kodiaq would be the next logical move.
Hybrids, PHEVs, EVs?
Russia is a long way behind European countries when it comes to any plans for battery-electric recharging and hydrogen refuelling stations in cities, let alone any form of incentive for OEMs to invest in locally built hybrid or PHEV models. Renault cannot delay spending on such technology forever as its rival HMG is already very strong in Russia and will at some stage begin to locally assemble or even manufacture more advanced tech.
Overview
Renault’s decision to become involved with AvtoVAZ has weighed heavily on the French state-owned firm. The fact that the maker of Lada cars has sustained enormous losses, is yet to become self-financing and remains a long way from being so, does not appear to have discouraged the management of Groupe Renault. Having been forced to inject funds into the company in December 2016 to keep it afloat, this also gave Renault a more than 50 per cent stake and the need to consolidate AvtoVAZ’s losses onto its own balance sheet.
Future model plan reports for other manufacturers can be viewed in the OEM product strategy summaries section of just-auto.com.
Future product program intelligence
Additional data on vehicle lifetime and future product plans, such as code names, production plants and expected annual build, are available in PLDB from QUBE.
Interview with AvtoVAZ Renault Nissan Purchasing localisation director.
