GAZ Group says despite the potential for yet more crises in the Russian market, it is aiming for the same level of investment this year.
Addressing the recent Russian Automotive Forum in Moscow, GAZ Group president, Vadim Sorokin noted the country had endured several difficult periods before.
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“Unfortunately, I don’t think this crisis is the last one [but] it is important we take advantage of these opportunities,” he said. “The crisis is a time which opens new opportunities.
“We should emerge out of it with new products. [In] 1986, 1992, 1998, there were several crises that we remember and a crisis should make us stronger.
“Our goal for 2015 – we continue with the same level of investment activity. Our objective is to gain additional market share, to start using better and newer technologies, to improve the quality of our personnel to help us cope with the challenges of tomorrow.”
GAZ remains the largest producer of commercial vehicles in Russia, but is encountering headwinds translated through a reduction in GDP and a fall in the number of small and medium enterprises that form the lifeblood of segments such as light vehicles.
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By GlobalData“We work on investment on a market that relies on investment and just like any company, we purchase when we see growth, that is what our customers do when they see transportation needs,” said Sorokin. “
“That is not happening today – it is a different kind of situation for us. On the other hand we see some positive factors. The prices of our international competitors have increased [for example].
“Another positive factor is there are government support programmes, natural gas fuel support programmes [and] cash for clunkers.”
The GAZ chief noted it was difficult to secure loans at the present interest rate of 14% in Russia – “you can’t take loans at the current rates – it does not make sense” – but the automaker was financing its investment itself partly through tough cost reduction which saw the company achieve RUB9.8bn (US$177m) in savings last year alone.
“We need this money to come up with new products on the market and upgrade our line up,” said Sorokin.
“The Russian market is too small for GAZ Group today. The only way we can grow is by increasing our export sales. We set up offices in al the promise [ing] countries around the world.”
Sorokin also noted the buses provided by GAZ for the Winter Olympics in the Russian resort of Sochi last year would now be launched onto the market.
The automaker provided 739 vehicles, which carried 42,000 passengers on ‘Olympic’ Golaz and Liaz brands, serving coastal and mountain clusters in weather conditions Sorokin described as challenging.
GAZ – which was also a supplier during Moscow’s Olympic Games in 1980 – previously said its buses would be used for suburbs in Moscow and St Petersburg as part of Olympic legacy pledges.
GAZ Group also recently delivered 95 gas PAZ-320412 buses to Krasnodar, with companies purchasing the vehicles through the Russian State programme to encourage the use of gas transport.
