AvtoVAZ says it is continuing to focus on 12 countries bordering Russia as it looks to diversify the offer to overseas markets.
Russia is being assailed on myriad economic fronts as the fallout from its political involvement in Crimea and supposedly East Ukraine continues to attract international sanctions and spook the markets, but there are also genuine opportunities.
Go deeper with GlobalData
Despite the domestic market severely dropping 38% in February, a rapid depreciation of the rouble is making Russian-produced goods and components significantly more attractive for foreign buyers.
“What we are doing now is a long-term strategy,” said AvtoVAZ CEO, Bo Andersson at the recent Russian Automotive Forum in Moscow. “There are 14 countries with land borders to the Russian Federation – we are focused on 12 of them for many years excluding North Korea and China.
“What is different? We know regulations are different – 1 May we will have certification to fulfil European standards – we will have Euro V and CO2 requirements. For many years we did not have it
“Challenges [are to] find the right partner. You don’t want to have a partner that is a fly-by-night operation. My favourite partner would be IKEA. They have global distribution – I am still working on it.”
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataAndersson broadened his theme to the importance of external component quality, an issue that has quickly forced its way high up the Russian automotive agenda and stressed the need for competivity at home.
“We need to be one of the three best in each segment we participate in,” said Andersson. “60% of parts going into a car are from suppliers – they must be globally competitive. The last four years AvtoVAZ paid our suppliers a 30% price increase, so most of our suppliers are not globally competitive.
“Everything we can in-source, we in-source. Today we do most of our stamping ourselves, we do most of the forgings, most of the castings.”
The AvtoVAZ chief added he remained happy with the vast majority of his Russian suppliers, but pointed out there were some who had “problems.”
“We have 724 suppliers in the Russian Federation – 713 of them are doing a fantastic job,” he said. “They deliver parts and quality every day and have a competitive price.
“Eleven of them have problems – it is a complicated situation.”
