Toyota is considering starting vehicle production in Russia for its popular Corolla and off-road Land Cruiser models. The Russian car market shows much promise for foreign car manufacturers. Russians are increasingly looking away from the stalwart Lada, and Toyota sees Russia as a suitable base for increasing its presence in the eastern European market.
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Toyota, Japan’s largest car manufacturer, has had a presence in Russia since 1998 when it opened its first sales and marketing office in the country. Toyota had planned to build a factory in Russia before the 1998 financial crisis, but then pulled out of the project because of the market’s collapse. For the past few years it has studied the market and carried out sales activities centred on the efforts of local dealers via various trading companies.
In 2002 Toyota sold approximately 80,000 vehicles in Russia, led by the Corolla, Camry and Land Cruiser 100. The company is aiming to sell 20,000 Land Cruisers a year in Russia by 2008.
After announcing that it is banking on 800,000 vehicles being sold in Europe in 2005, 10,000 more than the original estimated forecast, Toyota has confirmed its intention to reach 1.2 million sales by 2010. After the first eight months of this year, Toyota’s market share has increased from 4.5% to 4.8%. “With the level of sales that we have reached, it is time to issue a new long term challenge,” said Toyota’s vice president.
The promising Russian car market is especially attractive for Toyota as well as its competitors General Motors and Ford. The unprecedented economic and political stability will allow for continual growth of the market. An increasing number of modern cars are replacing the once pervasive Lada and foreign manufacturers are eager to get a share of this growing market.
By producing its models in Russia, Toyota will significantly lower logistics costs. The new plant would also provide an eastern European base for the company and help to raise its profile in the region.
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