Europeans Plan to Hike Car Sales

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Several European carmakers have plans to double sales in Russia this year, making a slightly deeper dent in a market dominated by cheaper domestically produced vehicles.

France's leading automaker, Renault, is betting this year Russian consumers will buy 5,000 units, Reuters reported. Last year, its sales totaled 3,002 cars, a figure two times bigger than 1999.

Another French auto manufacturer, Peugeot, intends to double sales from 1,400 last year to 3,000 in 2000, Gerard Jacquin, Peugeot's representative in CIS and Baltic States, told the Segodnya daily.

Sweden-based Volvo hopes its new S60 sports sedan will attract Russians and help it boost total sales by more than 50 percent to 1,400 cars.

And Europe's largest automaker, Volkswagen, which saw its sales dip by 201 units to 3,078 last year, is banking on sales picking up 10 percent.

"We will order 10 percent more cars for Russia compared with last year, and that's directly related to the growing consumer power on the market," Volkswagen spokeman Andrei Gordasevich said.

Gordasevich blamed dealers for the drop in sales in 2000, saying they were unable to meet demand for VW's most popular model, the Passat.

Industry experts said these carmakers should have little trouble meeting their goals since their sales base is so small to begin with, but they would face an upward fight if they ever hoped to gain a significant share of the market.

" I would be really surprised if Mitsubishi or Nissan, which already have high sales results, said they wanted to increase their sales in Russia," said Maxim Matveyev, an auto analyst at Alfa Bank.

Alexander Andreyev at Brunswick Warburg said foreign-made cars accounted for only 30,000 of the 1.2 million new cars sold last year.

Price is the reason many opt for domestic cars, he said. A Zhiguli VAZ 2110 with all the options costs about $5,000 compared with $20,000 for a new Volkswagen Bora or Volvo S40.

"Foreign vehicles barely make up a third of the country's car market," Andreyev said. "Of that total, new cars amount to less than 10 percent. The rest are illegal or used."

Andreyev said import taxes on new cars make them prohibitively expensive compared with domestic vehicles or second-hand imports. As a result, foreign carmakers have little chance of becoming major players on the market unless they slash costs by launching local productions.

Several manufacturers have already made baby steps in that direction.

General Motors has joined forces with AvtoVAZ to produce Niva 2123 sports utility vehicles, while Renault has a local assembly line for its Megane model at a joint venture with the Moskvich factory.