“The volumes are not looking”: why AVTOVAZ inhibits stronger market

Buyers at the time of start of sales of crossover Lada Xray

The decline continues

In the first quarter of 2016 sales of new passenger cars decreased compared to the same period last year by 16.9% to 319,1 thousand, follows from the data of the Association of automobile businesses (AEB) said on Friday.

In March, the drop in sales amounted to 10% (125.9 thousand cars). It’s better than in the first two months of the year: in January, sales declined 29.1%, in February — by 13.4%.

State of the automotive market in General is still bad, but he’s about to reach the bottom after many months of decline, said Chairman of the AEB automobile manufacturers Committee Joerg Schreiber. In his opinion, the situation in the coming months will depend on the macroeconomic situation and the government’s efforts to stimulate demand for cars.

The leader of the market remains AVTOVAZ, although its sales fell in comparison with March of last year by 18.8%. In the report of AVTOVAZ stressed that the results of the first quarter the share of Lada accounted for approximately 19% of the total car market of Russia.

Top 5 most sold in Russia of new passenger cars first entered the Lada Vesta (sales began in November of 2015). She climbed into the bestseller list from seventh to fourth place. Only in March 2016 in Russia it sold 4.6 thousand Vesta, which is almost three times more than in January 2016.

The Korean competitors of AVTOVAZ multidirectional dynamics. Kia sales in March rose 2%, to 12.3 million vehicles, Hyundai has lost 21% (11 thousand).

The leader in growth was the Ford: sales of the American manufacturer for the month increased by 120% to 4.1 thousand cars. 50% increase in UAZ sales (4.4 thousand). In the mass segment, the worst dynamics was the Datsun (minus 51%), SsangYong (minus 61%) and Mitsubishi (minus 45%).

The Deficit Of Lada Xray

In March in the top 25 most sold cars in the Russian market fell another novelty of AVTOVAZ — Lada Xray. According to the data of AEB, following the results of January—March has sold 2,5 thousand cars.

Dealers of AVTOVAZ faced a shortage Xray — the stocks cannot meet the demand, told RBC three vendor brands in Moscow and regions. According to two of them, the demand for the car above marketing capabilities of dealers by about 15-20%.

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A source at AVTOVAZ said that the company is aware of the high demand for Xray and increase production. Since January, when the plant has reached commercial production of the model, volumes have doubled, with 50 vehicles per day to approximately 100 units (as of the end of March). The growth of orders autoaccessories for Xray confirmed RBC two company AVTOVAZ.

According to the source at AVTOVAZ, the plan for the production of Xray in April — more than 120 cars a day, that is 20% more than in March. Thus, AVTOVAZ plans to cover the deficit of inventories of dealers. According to the representative of AVTOVAZ, the plant is working under orders of dealer network two months in advance. The Xray production will grow from month to month, he says.

AvtoVAZ will try

Sales Xray for the current year is 16 to 20 thousand cars (or 80-100 vehicles per day) depending on the market, a source at AVTOVAZ. Based on these volume dealers may again face a shortage Xray. The CEO of GC “Autogermes” Dmitry Polunin expects that by the summer the demand for the model can grow at least twice, with 1.5 million in March to 3 thousand cars per month. The same assessment give workers two regional dealers.

To cover the demand in 3 thousand cars per month, AVTOVAZ should be collected on cars 140-175 per day, depending on the mode of operation of the plant — a four-day or five-day weeks. When you save the plan of AVTOVAZ for the production of Xray for the current year and forecasts a deficit of dealers models could grow to 40%.

The representative of AVTOVAZ says that the plant “will try” to adjust the annual production schedule Xray, if the increased demand will continue. But the plant it is important not to hurt the vehicle quality. “The volumes are not looking,” says the representative.

Restrictions on release of AVTOVAZ Xray no, the company really works over the quality of new models, confirms a top-the Manager of one of the suppliers. He recalled that the same situation was at the start of sales of Nissan Almera (going in Togliatti since 2012).

The problem is in the suppliers of AVTOVAZ, said another company: because of the sanctions, the plant now has problems with the Turkish supply components, mainly rubber products. To replace the supplier, it takes at least six months, adds the source. About the same time, you may need to coordinate increasing production with other suppliers, says Vladimir Bespalov from “VTB Capital”.

The representative of AVTOVAZ problem with Turkish suppliers refutes.