AvtoVAZ achieves significant sales in Russias immediate neighbours (55,000 units a year in Kazakhstan, for example)

AvtoVAZ achieves significant sales in Russia's immediate neighbours (55,000 units a year in Kazakhstan, for example)

AvtoVAZ head Bo Andersson believes that Russia's car market could return to 3m units by 2018, if things "go well".

Russia's car market this year could fall by around 40% as the country's economy is hit by recession in the face of a low oil price and the effects of EU sanctions over Ukraine. Andersson told delegates at the Automotive News Europe Congress in Birmingham that he expects the passenger vehicle market in Russia to turn out at 1.5m-1.7m units this year.

"If everything goes well we could be back to 3m by 2018," he said.

He also pointed out that AvtoVAZ is relatively well positioned in Russia, compared with the foreign joint ventures who are struggling with lower volumes and the impact of the lower rouble on the cost of imported parts.

"The only vehicle manufacturing plants in Russia that are sustainable are producing over 175,000 units a year and there are five of them. We have three of that five."

He also said that AvtoVAZ is doing good business in neighbouring former Soviet countries (CIS). "Today we have fourteen countries that have land borders with the Russian federation. I tell my team to focus on twelve of them and stay away from two - North Korea and China," he said. "The rest are very good markets and we have a huge advantage. These are markets where Russian companies traditionally have a benefit."

Andersson told delegates that he has recently been on a Russian trade mission to Egypt. "It is clear that there are companies that we are friendly with and who are dependent on our business.

"When you add Russia domestic market, plus CIS and some other countries, it's rather important."

Andersson said that AvtoVAZ will produce around 585,000 vehicles in 2015 and that the company is continuing to improve quality and efficiency.