AvtoVAZ is urging the Russian government to stick with its Decree 166 programme mandating local content in vehicles as the automobile market continues to struggle under intense economic pressure.
The passenger car and LCV market in Russia has been under intense strain for the past 12 months as consumers decide to either keep their roubles to themselves or switch spending away from big ticket goods.
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Some even estimate the situation could see a low-point of 1.5m vehicles per year – a stark contrast to previous estimates in rosier times that envisaged Russia overtaking Germany as Europe’s largest market and even reaching a fabled 4m watermark.
To help Russian production, Moscow imposed its Decree 166, with the added positive side effect of rouble depreciation triggering a huge leap in domestic component competitivity.
“Let’s stick to the programme of 166, giving benefit to local producers,” AvtoVAZ CEO, Bo Andersson told just-auto on the sidelines of this year’s St Petersburg International Economic Forum (SPIEF).
“We have 81% of our cost structure in roubles so it is a huge advantage for us.”
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By GlobalDataThe AvtoVAZ chief conceded it was “very hard” to know when the Russian market would rebound to perhaps the 3m mark, but he confidently predicted numbers would pick up “relatively quickly” perhaps even in a couple of years.
“In two years we could be back to 2.8m,” he said. “Russia is unique in this perspective: We still have relatively few cars per 1,000 people – it is an opportunity.”
Andersson spoke shortly after meeting a group of St Petersburg dealers on the city’s historic Palace Square, site of the origin of the Russian revolution in 1917, where he also inspected a range of Lada vehicles and listened to retail concerns.
“It is always difficult to meet a dealer group,” said Andersson, adding: “I was happy to see they acknowledged quality is getting better, transportation issues are gone.
“It is extremely important to come back to St Petersburg – this year over 9% [sales] – last year we had 6%.”
