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. Last Updated: 07/27/2016

General Motors Passes on the Buck

VedomostiThe new Chevy-Nivas have gone from costing $8,000 to $8,500 to 8,500 euros, which in dollar terms means $1,200 more.
The first Russian-American automobile will no longer be priced in dollars.

Market analysts view GM-AvtoVAZ's trek into the euro zone this week as another excuse for the company to jack up prices for its sole product -- the Chevrolet-Niva.

When GM-AvtoVAZ opened its factory in Tolyatti last year, company officials announced they were finally bringing an affordable, Russian-made quality automobile to the market.

The jeep originally cost $8,000, but as demand increased the price rose to $8,500, which the company attributed to design improvements.

On Wednesday, the numbers were the same but the symbol in front of them changed from "$" to a euro sign, effectively raising the price another 14 percent in ruble terms.

GM-AvtoVAZ spokesman Vladimir Derbenyov said he didn't expect the changeover to scare customers away, "because starting in October we will be selling improved Chevy-Nivas with four major changes."

The changes -- a new generator belt, electronically adjustable mirrors, a coolant for the power steering column and a new exhaust system -- are worth the extra $1,230 consumers will have to pay, he said.

Asked why the company decided to denominate its prices into euros instead of simply raising the price in dollar terms, Derbenyov said it was following the market trend; Ford switched to the euro in February.

Ford, which produces its Focus model at a plant near St. Petersburg, imports component comprising nearly 80 percent of the car's value. By comparison, GM-AvtoVAZ said 60 percent of the components for the Chevrolet-Niva are produced by AvtoVAZ, while the remaining 40 percent are produced almost exclusively by other Russian suppliers.

"We are improving the quality of the car by using new parts assembled in Russia from Western components," Derbenyov said. "Their prices are denominated in euros, too. This is an ongoing process."

But analysts said it was not the market's invisible hand forcing GM-AvtoVAZ over to the euro.

"[They] are just using the situation to raise the price of their product even though most of its components are made in Russia," said Yelena Sakhnova, an analyst at UFG.