Russia premiers upmarket new cars following crisis

Mon Aug 23, 2010 11:49am EDT

Related Topics

* High end manufacturers set to dominate Moscow motorshow

* Attendance expected to come close to boom year 2008

* Show was cancelled in 2009

By Gleb Stolyarov

MOSCOW, Aug 23 (Reuters) - Russia's autoshow is expecting a host of wealthy car-buyers to flock to the annual auto industry bonanza this week as high-end vehicles take the spotlight away from budget rivals.

Russia's car industry has gradually come back to life in 2010 due to increasing sales of low-cost vehicles such as Ladas, but exhibitors at the Moscow motorshow will be dominated by premium manufacturers gunning for big spending Russians.

Among eight world car premiers are a Jaguar XJ and Land Rover Freelander, both owned by Tata Motors (TAMO.BO), and a new Porsche 911 (PSHG_p.DE). Organisers are expecting around 1.5 million petrolheads to attend the event, close to the 1.6 million who visited in the boom year of 2008.

"Everything is back to the level of 2008 -- a huge area, crazy investments," - said Oleg Datsko, chief executive of internet sales site Auto-Dealer.ru. The show will open to public on August 27.

The show was cancelled last year as the global economic crisis devastated the Russian car industry. Sales nearly halved year-on-year as consumers were denied access to credit, sending several manufacturers close to the wall.

BUDGET LADA

Sales for the first seven months of this year are up 9 percent on 2009 to 963,688, although this is still 45 percent below 2008 levels. The government has said it expects a 15 percent rise for the year as a whole.

The 2010 revival has been partly based on a state-sponsored scrappage scheme that has awarded 50,000 roubles to drivers trading in locally made cars aged ten years or older.

The scheme was introduced in March and recently extended into next year. Its focus on low-end cars has been of particular benefit to Lada-maker AvtoVAZ (AVAZ.MM), which helped fuel a 48 percent industry rise in July. [ID:nLDE6781CO]

The head of the Russian Association of Cardealers Dmitry Gulin said manufacturers had chosen to exhibit more premium cars in the hope that budget models would continue to sell without promotional efforts.

The Association of European Businesses (AEB) said the Russian car market fell 49 percent last year to 1.46 million, but the smaller premium segment fell 36 percent.

The flagship manufacturers at the autoshow are foreign groups, although some will produce the new cars in Russia. Local manufacturers will also have cars on display -- AvtoVAZ will exhibit a new seven-seater budget Lada R90.

Other world premiers include a Toyota Highlander (7203.T), a Ford Mondeo (F.N) and a Renault Latitude (RENA.PA). France's Renault is a 25 percent owner of AvtoVAZ, and has pledged to start manufacturing its own brand at the Russian giant's plant in Togliatti, central Russia. (Writing by John Bowker; Editing by Jon Loades-Carter)

FILED UNDER: