“Lada competes with all non-Lada”: AvtoVAZ President – on the cost of the new Lada Aura and price increases

About sales

“If we talk about the new car sales market in general, it is breaking records. But if we talk about sales of the Lada brand, then we are talking about slight and cautious growth that turns into stagnation, perhaps even decline. And the main reason for this is the current aggression and expansion of the Chinese car industry and the expectation of an increase in recycling collection, which causes a surge in demand for Chinese cars.”

According to Sokolov, in 2022 “the market will have shrunk to 700 thousand cars” and Lada’s share will have increased to almost 40%, although the company has sold half as many as it does now. Currently, the president of AvtoVAZ clarifies that on average the plant sells about 40 thousand cars per month.

About the competition

“Firstly, Lada competes with everyone who does not represent the Lada brand. Secondly, of course, there is competition with older cars, although not as pronounced as in 2022; then AvtoVAZ could not afford to produce fully functional cars.”

Sokolov said that China, firstly, can use the global component base. Secondly, the country’s macroeconomic conditions allow the Chinese automotive industry to “inject funding” into the Russian market to maintain its sales. Thirdly, the AvtoVAZ president stressed, the volume of state support in China is aimed not only at supporting exports, but also at creating local capacities.

On government support

Sokolov hopes that the taxi localization law will be approved in its original version, as it will allow Lada to supply domestic vehicles to the Russian taxi fleet.

According to the AvtoVAZ president, other measures that could support the Russian car industry include raising the bar for localization within the framework of the preferential car loan program and prolonging the plan to defer payment of tax on scrap metal until the end of the year. Lada is “happy with the gradual increase in tariffs” as the move will become an incentive for foreign brands to invest in production in Russia.

On the increase in prices of Lada cars.

Sokolov identified two categories of growth: growth and indexation. According to the head of AvtoVAZ, indexation was carried out in August due to inflation. Since the beginning of the year, the businessman said, the company has been indexed twice: in May by 2.9% and in August by 1.4%.

About the cost of Lada Aura

The new model is scheduled to go into mass production in September. Sokolov explained that the cost of a business-class sedan will be more than 3 million rubles, but Lada will release a cheaper version for taxis.

“(The taxi version – RB.RU) will have a cheaper interior trim and a different audio system. Otherwise, it will be the same car, because it should be driven and not “checkered.”

About debts

“The debt burden is still high – 100 billion rubles and more. This is a significant burden, especially with the current interest rate, which immediately means that we have to find almost 20 billion additional rubles to repay the loans annually. But the banks believe in us. We now have long-term credit lines open in many banks. We must be responsible for this loan money and here we need an open, long-term state policy.”

AvtoVAZ proposes to make public the special investment contracts concluded by several car factories with the Ministry of Industry and Trade, so that “all actors working in Russia can see who plans to produce, how much, in which segment and how much to invest.” This will make it possible to clearly plan investments, the businessman concluded.

On production in other countries.

Sokolov said that Lada still has plans to resume production in Egypt, however, the macroeconomic and foreign policy situation for all of the company’s partners abroad is worsening due to increasing sanctions pressure.

“We remain ready to resume our projects in both Kazakhstan and Uzbekistan. But they are stalling. We have preparation number 1. All proposals have also been submitted. The issues are being discussed at the highest political level.”

AvtoVAZ is a Soviet and Russian automobile manufacturer founded in 1966 in Togliatti, where the company’s headquarters and main production are located. The company produces cars under its Lada brand and until March 2022 also produced cars under the Nissan, Renault and Datsun brands.

According to its own data, by the end of 2023, the plant will have increased its production of cars to 374,077 units, and Lada will have increased its share of the Russian car market to record figures over the past 20 years – about 35%.