The Russians Are Coming

By Andy Bannister

02.11.2008

Russia’s domestic car makers have not made much of an impact on the rest of the world, at least in recent years. But signs are now emerging to suggest that the sleeping giant may at last be stirring.

Most people who’ve heard of an indigenous Russian car will probably think of Lada, the brand name of AvtoVAZ, Russia’s number-one seller. In a booming home market the company sold a record 663,500 units last year.

Lada is a relative newcomer among manufacturers, dating back to 1966 when Fiat of Italy and the government of what was then the Soviet Union signed a remarkable agreement to build a new factory – now said to be the third largest auto manufacturing plant in the world – and a city of 650,000 inhabitants on a grassy space beside the River Volga, south east of Moscow.

The city and plant were named Togliatti in honour of the then leader of the Italian communist party, who had helped broker the deal

The agreement was to build a version of the Fiat 124, a boxy but successful 1960s saloon, albeit with simpler Russian mechanicals fit for the most extreme national climate in the world. The Lada was soon born and was a huge step forward from Russia’s previous family car, the archaic Moskvich.

In the 1970s Lada became a household name in Western Europe thanks to its incredibly low price, leading other manufacturers to accuse the company of selling below cost to gain desperately-needed foreign currency. By the 1980s, when a face-lifted and even boxier-looking Lada, the 2105 – known as the Riva in England and the Nova in Germany – was launched, sales were into the tens of thousands despite fairly dreadful build quality.

Those days of huge export success have now gone, but Lada is still a very successful manufacturer, a fact underlined by the recent purchase of 25% of its stock by Renault of France, stealing a march on AvtoVAZ’s previous partner, General Motors.

Renault has indicated it wants to build up the Lada brand as an entry-level player in a wider range of export markets. This seems an interesting but potentially confusing strategy, as Renault already has its own successful bargain basement manufacturer, Dacia of Romania, which has begun to make real inroads with its low-priced but modern Logan saloon and estate car.


Lada currently has a minimal presence in a few western European markets, with its most consistent seller being the four-wheel-drive Niva, a design dating back almost unchanged to 1977. A second generation Niva is already in production in Russia, badged as a Chevrolet, under the terms of the earlier agreement with GM, which also builds an Opel saloon – the Astra-based Viva – at the Togliatti plant. The future of these joint models seems likely to be limited when Renault’s presence becomes more established.

Lada’s other current export offerings are the 110 saloon, 111 estate and 112 hatch, a series of interestingly-styled but dated 1500cc models which have been around for well over a decade. In Russia they have been recently joined by an updated version, known as the Priora.

A potentially more serious export offering is the Kalina, a smaller series of cars which superficially resembles the mid 1990s Opel Corsa – illustrating one current problem Russian car manufacturing faces, the long lead time between a prototype being first aired at a motor show and full-scale production starting. The Kalina looks dated already in comparison with its low-priced rival, the Dacia Logan.

For Renault, the rapid growth of the Russian market is enticing, and exploiting this by tapping into the well-established Lada brand looks like an obvious move. One potential pitfall is that sales of foreign brands are mushrooming in Russia, with many consumers perceiving they have greater prestige and quality. Bolstering Lada’s image and product range will need to be a priority.

Less well known than Lada is Russia’s second biggest domestic brand, GAZ. It makes the fabled Volga large car, as well as a wide a successful range of vans and trucks.

The Volga, known in its current incarnation as the 31105, has nearly been face-lifted to death and dates back as a basic design almost 40 years but still has considerable appeal on the domestic market. However, if the company is to grow it needs new models, and fast.

GAZ’s global ambitions were signalled in 2006 with its purchase of the UK-based van manufacturer, LDV, an odd relic of the former British Leyland empire. LDV is itself an obscure make with a small global network but has an attractive and relatively new product, the Maxus mid-size van, which will also be produced in Russia from 2009, and GAZ is promising to take the LDV brand into many new markets.


GAZ has also purchased American technology in the shape of the 2001 vintage Chrysler Sebring, which will shortly go on sale in Russia as the GAZ Siber, manufactured in the GAZ factory at Nizhny Novgorod with a choice of three Chrysler-sourced engines. The Siber has been given a new look with the help of British consultancy Ultramotive, and will also be exported to other ex-Soviet markets within the Commonwealth of Independent States.

Reports in Automotive News Europe also suggest that GM, having been jilted by AvtoVAZ in favour of Renault, is likely to be the new strategic partner for GAZ, with its first move being providing the company with a new model – presumably another local version of an existing design – which will be smaller than the Siber and take GAZ into direct competition with Lada.

Whether Lada or GAZ, with the help of their partners, have the potential to become global brands remains to be seen. The strength of the growth in the Russian market and the country’s evident self-confidence does suggest, however, that Russia’s automobile industry has a part to play on the world stage.

COPYRIGHT Autosavant.net – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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3 Comments

  1. That re-styled Sebring actually looks better, imo. Maybe Chrysler should send some of their other stuff to the same styling firm.

  2. Yeah, I was thinking the same thing about the Sebring! Chrysler should hire those Brits at Ultramotive to re-style all of their styling dogs to get more life out of them until the next generation shows up.

    You have to wonder how many other obsolete platforms the domestics could sell to the Russian firms. They could sell the design, the tooling, everything and make a little money off those lines that had already been paid for.

  3. I go to Russia a couple of times a year and most Russians love American cars. It’s too bad the domestics can’t sell their big cars over in Russia. They’d sell a lot.

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