RUSSIA: Ford eyes doubled car sales

By just-auto.com editorial team | 2 December 2005

Ford is expecting to nearly double sales of passenger cars in Russia next year, and also expects similar growth in sales of its commercial vehicles over the next few years as the market warms to foreign manufacturers.

According to a Prime/Tass-Dow Jones report, Ford, the only foreign car maker with a 'green field' production site in Russia, has enjoyed sales growth since it launched locally in 2003. In May 2005, it introduced the Focus II, which is expected to sell 36,000 this year and as much as 60,000 in 2006.

"We at Ford think that Russia is one of the world markets with the biggest potential for growth, alongside China and India," Ford Russia president Henrik Nenzen told Dow Jones Newswires in an interview. "Ownership per 1,000 is very low, disposable income is growing rapidly, people are very knowledgeable about cars, they want to buy good cars."

The report noted that Russia's car market has low penetration dominated mainly by the largest domestic manufacturer OAO Avtovaz, but rising incomes and an improved regulatory environment is fuelling sales of foreign cars, notably in the mass-market segment.

Dow Jones said foreign manufacturers are expected to take a 38% share of new car sales in Russia in 2005, up from just 4% in 2000. According to Aton brokerage, total sales of new cars in Russia, both local and imported, will reach 1.5 million this year, up from 1.382 million in 2004. Ford said it would have a market share in 2004 of 11.4%, up from 11.1% in 2004.

For Ford, Dow Jones noted, growth in Russia could help offset falling sales in the US and Western Europe and consequent financial losses.

In Russia, demand for the Focus II medium-size hatchback is so great that there is queue of 25,000 prepaid customers prepared to wait six months for delivery.

Nenzen reportedly attributed its popularity to the car's better technology over local rivals and a special "winter package" Ford is offering, which includes 12-year rust protection. Cars produced by Russia's domestic automakers have a poor reputation for rust and for struggling to start in Russia's bitterly cold winters, Dow Jones noted.

Nenzen also said Russian car buyers are no longer driven just by price, and are basing their buying decisions on a host of factors such as fuel consumption, safety, and the sell-on price, giving Ford an advantage over local manufacturers.

This change in attitude is also being seen in Russia's commercial vehicles sector, where Ford hopes to double sales of its [imported] Ford Transit minivan in the next few years, Dow Jones added.