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RUSSIA: Renault bullish on long-term prospects

By Simon Warburton | 4 September 2014

“Motorisation ratio in Russia is 275 cars per 1,000 inhabitants - roughly half of Western Europe" - Renault Russia general director Bruno Ancelin

“Motorisation ratio in Russia is 275 cars per 1,000 inhabitants - roughly half of Western Europe" - Renault Russia general director Bruno Ancelin

Renault Russia says its domestic market still remains one of huge opportunity despite the current political crisis raging between Moscow and Western capitals concerning Ukraine.

Political instability has delivered month after month of falling sales for the market as whole, but Renault is steadfastly optimistic it will ride out the present storm to build on its first half share of 7.8% and its position as the second brand in Russia behind Lada, produced by partner, AvtoVAZ in Togliatti.

Renault sold 210,000 vehicles in Russia last year - up 11% to give it the 7.8% figure with the Duster SUV the top-selling model of its kind - while with partners AvtoVAZ and Nissan the grouping has a 30% market share.

The French automaker places Russia in its largest region of Eurasia, with the country having 90% of sales in the area, but it also has smaller volume in Belarus, Kazakhstan, Ukraine, Armenia, Georgia, Azerbaijan and Turkmenistan.

Prospect countries include Kyrgyzstan, Mongolia, Uzbekistan and Tajikistan.

"Mongolia was allocated to Eurasia only some weeks ago, so it is a new prospect for us," said Renault Russia general director, Bruno Ancelin, last week at the Avtoframos plant in Moscow, shortly before news of his appointment as EVP, product planning and programmes of the French Group.

"Uzbekistan is a big market - not so big as Kazakhstan and Ukraine - but [it is] totally protected by an an agreement between GM Daewoo and the government of Uzbekistan.

"[Regional] sales are continuously growing in terms of total Renault percentage sales in the world. In 2009, 3.5% of sales worldwide of Renault were in this region and now, it is not far from 9%."

Part of Ancelin's optimism for the market can be gleaned from his statistics showing a Russian car parc of 37m vehicles for its 142m inhabitants, compared to the current car ownership in France of 45m for a far smaller population.

"We have a lot of very old cars to be replaced in the future," said Ancelin. "We have a small crisis now and nobody knows if it will be a small or big crisis in the medium and long term [but], there is huge potential for growth in this market.

"Motorisation ratio in Russia is 275 cars per 1,000 inhabitants, which is roughly speaking half of Western Europe, but distances are much larger and people need cars."

Renault's business in Belarus and Kazakhstan is also helped by the customs agreement signed by the former Soviet Union Republics and Russia, which allows vehicles to be manufactured and exported free of tax to Minsk and Astana.

Key Renault products for Russia include the New Logan, Sandero and Sandero Stepway, as well as the Duster SUV.

Renault says its sold 500,000 Logans before its new model launch in May this year and maintains the majority of taxis in Moscow are Logans.