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March 1, 2010

RUSSIA: Expanded Renault Logan plant opens

Renault today (1 March, 2010) officially opened the second phase of its Avtoframos plant in Moscow following a EUR150m (US$203m) investment.

Renault today (1 March, 2010) officially opened the second phase of its Avtoframos plant in Moscow following a EUR150m (US$203m) investment.

The automaker currently has a 5% slice of the Russian market and is the fifth-ranked brand in the country with its Logan line accounting for nearly 54,000 of the 72,000 units sold last year.

Today’s inauguration, attended by Renault chairman and CEO Carlos Ghosn and Moscow mayor Yuri Luzhkov, marked the ramping up of Russian production from an initial capacity of 60,000 vehicles to 160,000.

Avtoframos is expected to reach that level in 2011, Moscow mayor Yury Luzhkov said during the event. It produced 51,000 vehicles in 2009 and output is expected to tally 80,000 this year.

Avtoframos is a joint venture of the Moscow city government and Renault, which owns a 91.4% stake.

Avtoframos has been producing Logan sedans since 2005 and started Sandero hatchback output last December. Sales of the new model began today.

Despite the Russian market plummeting 49% in 2009, Renault remains optimistic it can make inroads in the arena.

Current car ownership is only 230 vehicles per 1,000 inhabitants compared with 600 per 1,000 in western Europe.

Renault said in a statement: “Logan has sold well in Russia since its launch in 2005, even in the midst of the crisis. This demonstrates the importance of offering locally produced vehicles tailored to customers’ needs.

“In 2009 Logan was the top-selling foreign vehicle in Russia, enabling Renault to grow market share by 1.3 percentage points to 5%.”

The Avtoframos expansion included a new paint shop to handle 15 vehicles per hour, a body shop capacity boost from 15 to 30 vehicles hourly, thanks to new robots, plus extension of the final assembly line. Duster crossover production will start at the end of next year.

Local content for the Sandero start-up was 44%, the same as for the Logan. Some parts are sourced from Pitesti, Romania, the mother factory for the Logan line.

The ultimate aim is 75% which Renault said could be achieved by growing the supplier network in partnership with Avtovaz and alliance partner Nissan.

The success of the Logan line in Russia’s entry-level segment led to the launch of the Sandero in the same sector, which accounts for one third of the market.

Renault has 100 outlets in Russia covering cities with a population of 300,000 or more. This is the sixth country to produce the Sandero, after Brazil, Romania, Colombia, Morocco and South Africa.

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