Car makers look to Russian revolution

Aug 29 2008 Bill Caven

Car makers look to Russian revolution

THE Russian revolution has moved into overdrive as it prepares to become the biggest new car market in Europe.

Despite foreign unease over the recent Georgian crisis, new car sales are booming spectacularly in the East.

More than three million vehicles have been sold there this year alone, a staggering 40 per cent increase, which bucks the trend of faltering sales elsewhere in Europe.

And many of the major manufacturers are confidently predicting that Russia will overtake Germany as the number one player before the end of the year.

Several automakers are set to step up investment to cash in on this rapidly expanding market.

Volvo confirmed it will be spending 100 million euros in the coming year expanding its dealer network by more than 20 new units.

The announcement by Fredrik Arp, chief executive officer, came as Volvo launched its XC60 at the Moscow International Motor Show.

He said: "Russia is the new powerhouse in the global automotive industry. We have already sold 21,000 new vehicles this year, an increase of 95 per cent.

¿And we are confidently expecting this figure to be nearer 29,000 by the end of the year. Everything points to the fact that the Russian market is in full swing and one of the most important for the growth of the Volvo brand.¿

One of the first of the manufacturers to establish a foothold in the Russian market was Ford who opened a production plant at St Petersburg nearly a decade ago.

It produces 125,000 vehicles including the Focus and now the new Mondeo and this figure is expected to rise by more than 50,000 before the end of the year.

Ford is hoping to cash in on the growing sports utility vehicle sector which now accounts for 20 per cent of all sales in Russia.

The blue oval badge currently sells the Escape, Explorer and more recently the new crossover, Kuga.

Ian Slater, Ford vice president, said: "Our involvement in Russia has been quite a success story. It has become one of the biggest areas in the world and continues to grow dramatically.

¿The Ford Focus is already built there and is currently the biggest selling vehicle in Russia. In addition the new Fiesta will go on sale in November and we expect that to do very well for us there."

With production now at full capacity Ford will step up its interest in the SUV segment during 2009 to maintainise sales.

Despite a number of Russian-built models on display it was the European and Japanese manufacturers who attracted the most interest at the show.

Already it is the premium brand automakers who are benefiting from the massive consumer confidence being experienced across Russia in the last few years.