Renault boosts capacity at Moscow plant ahead of Russia’s new ‘cash for clunkers’ program
By APMonday, March 1, 2010
Renault gears up in Russia
MOSCOW — Renault SA says it is ready to take full advantage of Russia’s cash-for-clunkers program, which starts next week, after ramping up its investment in the country by doubling capacity at its Moscow plant.
The French car maker has invested euro150 million ($204 million) to bring the plant’s capacity up to 160,000 cars per year, company president Carlos Ghosn said Monday, as the first Moscow-made Sandero hatchbacks were offered for sale.
They join the Logan model, which has been produced at the Moscow plant since 2005 and was the best-selling foreign car in Russia last year.
Renault faces tough competition in Russia. Logan overtook the Ford Focus in last year’s sales by just 1,761 units. Ford is among the other global car makers that have started production in Russia in the past few years in an effort to cash in on the booming market. There are currently as few as 230 cars for every 1,000 people in Russia, compared to around 600 in Western Europe, according to Ghosn.
Russia had been on track to become Europe’s largest car market in 2008, but sales halved last year as the country was battered by the global economic downturn. Car sales are now back to 2005 levels, and industry analysts say they are likely to improve only slightly or remain flat in 2010.
“We think the Russian market has bottomed out,” Ghosn told journalists. “From now on we should see a recovery.”
In an effort to spur sales, the Russian government on March 8 is starting a highly anticipated scrappage scheme similar to the cash-for-clunkers programs that boosted sales across Europe and the United States in 2009. Drivers who turn in a vehicle that is at least 10 years old will receive a certificate for 50,000 rubles (about $1,670 or euro1,225) to put toward the purchase of a new car built in Russia.
The incentive represents about one-sixth of the price of a Logan or Sandero.
Ghosn was to meet later Monday with Prime Minister Vladimir Putin, who has pushed Renault to increase its commitment to AvtoVAZ. Renault holds a 25 percent stake in the struggling Russian car maker.
The announcement of Renault’s increased investment in Russia came the same day President Dmitry Medvedev was to begin a state visit to France.
Tags: Eastern Europe, Europe, Geography, Government Programs, Moscow, Ownership Changes, Russia, Vladimir Putin
