Blog: Dave LeggettBrief report from Prague

Dave Leggett | 26 June 2007

A number of things stood out from today’s Automotive News Europe Congress sessions. Max Warburton from UBS Investment Bank suggested that there are two to three potential private equity firms in the running for Jaguar and Land Rover and that no industry participant wants it. Rather more surprisingly, he also said that an industry buyer could take Volvo. What’s more likely, Renault or the Wallenbergs?

The future of Volvo was uppermost in people’s minds when we had a presentation from Volvo Cars chief Fredrik Arp. It was the elephant in the room. Mr Arp dodged the question by saying he is pleased to be at the helm of a brand that is growing. It may well be doing better now than it was, but should Volvo have gone for a compact MPV rather than the C30? It was a good question to which the answer for many would be, yes.

We heard quite a bit about Russia. “Think of Russia as Holland with oil,” said Matt Donnelly of Rolf (a car distributor for many brands in Russia) pointing out that although it is a big place the centres of population are concentrated in St Petersburg, Moscow and along the River Volga (think of the shape of a rat – the Volga is the tail). The bloke from AvtoVAZ was a no-show. Donnelly reckons AvtoVAZ will disappear and that Magna can’t help it to do a Russian car at the right price (‘Made in Russia’ equals need to discount, he said). Pity someone from AvtoVAZ wasn’t on the panel to put the other side of the argument.

Again, for all the risks, the momentum seems to be there to invest in Russia. As GM’s Jonathan Browning said, the risks associated with being on the outside looking in at a high-growth market are bigger than those associated with being in Russia. I had a chat with Mr Donnelly who is an entertaining fellow (and reads just-auto). His biggest dealership in Moscow does 300 news cars a month and is looking at 16,000 this year. The numbers are certainly big. How do distributors make their money on imports? One thing is to import the cars ‘naked’. Cheap labour means that things like the car stereo can be best done locally – which also means keeping the workshops busy.

A big dinner is on tonight. The Prague Hilton is a good place to have an event like this. Only small problem is that I can't navigate the menu on the TV in my room. On the plus side, working the shower is not an issue though. It wasn't so long ago that I found myself taking a bath in a hotel because the shower controls defeated me.   


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