The Russians have stopped buying "Chevrolet Niva»

Through short-sighted pricing policy, management joint venture «GM-AvtoVAZ" scared off potential buyers, "Chevrolet-Niva" Last week, President - General Director of OJSC "AvtoVAZ" Vitaly Vilchik during a meeting with members of their workforce for the first time made a public criticism management joint venture «GM-AvtoVAZ". The essence of his claim is that as a result of failures of management of the joint venture produced «GM-AvtoVAZ" SUVs "Chevrolet-Niva" were not in demand in the market. This is a translation of vehicles "Chevrolet-Niva" on the euro-price fall of 2003, which happened in respect of this car is a luxury. As a result, sales of SUVs produced by the joint venture, have fallen sharply, and to reverse the situation has not helped even reverse translation of the price in dollars: Russians are not buying these cars, waiting for further price reduction. To increase sales, "Chevrolet Niva", Vitaly Vilchik going to sell them through a dealer network of AvtoVAZ. But experts say that to truly solve the problem and increase the demand for the products of joint venture helps a radical reduction in the price. Therefore, the strategic goal the company should be a gradual transition only to the domestic components, the quality of competing with imports, but cheaper. JV «GM-AvtoVAZ" is one of the largest to date, foreign investment projects in the Russian automotive industry. GM and companies "AvtoVAZ" belongs on 41.5% of the joint venture, and the EBRD - the remaining 17%. The total cost of the project - 332 million dollars. Back in August 2003, a joint venture general manager John Mylonas said that the plant «GM-AvtoVAZ" is working as planned, and its products are in demand. True, the annual plan for producing cars "Chevrolet-Niva" in 2003, the company failed to comply. So, instead of 35 000 SUV, "Chevrolet Niva" was produced 25 235, of which at the beginning of January sold about 23,000 cars. The volume of production declined due to pricing management joint venture, which led to a drop in demand for cars. "The main reason for drop in demand for" Chevrolet Niva, "- this is an ill-considered move on the euro, prices in the autumn of 2003. While others collected in Russia SUVs (Kia Sportage, UAZ, etc.) at the end of the year were sold at various credit schemes, or just became cheaper (in this way remains sold cars built in 2003), «GM-AvtoVAZ" in fact increased the cost of the car in a minimal configuration with 8.5 thousand dollars to nearly 11 thousand dollars. Due to the fact that within a year "Chevrolet-Niva" enjoyed good demand, was a great temptation to raise the price on it that the managers of joint ventures and done. But it did not increase the earnings of JV «GM-AvtoVAZ", but only deterred buyers, "- told RBC daily, a source close to AvtoVAZ. This marketing approach was illiterate and yet because there was no joint venture managers in stock options elaborate further action. "For example, the present price is" Chevrolet-Niva "again is calculated in rubles and in fact reduced (it is 9.6 thousand dollars). In other words, now, instead of buying cheapened "Chevrolet Niva", the consumer or buy another car or have to wait for further price reduction of up to 8.5 thousand dollars. But «GM-AvtoVAZ" is unlikely this will go. Thus, the demand for these cars for today is "frozen", "- says the source RBC daily. True, in the joint venture «GM-AvtoVAZ" more optimistic and even say that the failure of the implementation plan for the production of last year will not affect the plans of the company. Said John Mylonas at a press conference held in mid-December 2003 and on the results, the production plan «GM-AvtoVAZ" in 2004 will remain unchanged - 60 thousand cars, and in 2005 - 75 th cause of his optimism that, despite the failure of sales at the end of 2003, the joint venture still finished the year with a profit, but did not specify how much was profit. However, Vitaly Vilchik on Wednesday expressed doubts about the reality of the plan even for this year. He said the plan for 2004 should be reduced to 40 thousand cars. To improve sales, "Chevrolet Niva" Mr. Vilchik proposed to implement it through the trading network of AvtoVAZ (now selling "Chevrolet Neve" is available through its own dealer network joint venture «GM-AvtoVAZ," AvtoVAZ their previous dealers not to sell). According to Vitaly Vilchik already sent the first batch of cars more vazovskim dealers. In total during the year through its network of AvtoVAZ plans to sell about 15-20 thousand "Chevrolet Niv." "Of course, the implementation of the" Chevrolet-Niva "across most extensive distribution network of AvtoVAZ will help to raise its sales," - commented the decision RBC daily Kovrigin Alexander, Deputy General Director of "ASM-Holding," engaged in research of the Russian automotive market. However, in this regard is a different opinion. "The organization of the sale of" Chevy-Niva "via the AvtoVAZ dealers to help dealers« GM-AvtoVAZ "only allows you to" scatter "the accumulated stocks of goods in 2003" - says a source close to AvtoVAZ. In other words, only the sales of "Chevrolet-Niva" through a dealer network of AvtoVAZ is unlikely to rectify the situation with the demand for these cars. Therefore, the most probable solution to the problem may be to reduce the price of the car (for example, up to 8 thousand dollars) for making maximum use of domestically produced parts, and, if possible, good quality. "For this« GM-AvtoVAZ "to produce a car, most of the components of which are locally produced," - said Stanley Root, a partner at audit and consultancy firm PricewaterhouseCoopers. In the words of Alexander Kovrigina, in contrast to the plant for production of Ford Focus Vsevolozhsk, «GM-AvtoVAZ" initially counted on the assembly of cars from parts produced domestically. "If the quality of some Russian components was unsatisfactory, they were replaced by imported components," - he said. Nevertheless, he predicted, eventually «GM-AvtoVAZ" still be able to collect "Chevrolet-Niva" only from domestic components of acceptable quality, which, naturally, will make the car more affordable. Andrew Heart