Russian VW sales grew twice as fast as sector sales in 2017

Russian VW sales grew twice as fast as sector sales in 2017
VW Russian sales were up 20% in 2017 y/y
By bne IntelliNews January 13, 2018

Volkswagen saw sales in Russia rise by 20% in 2017, almost twice as much as the forecast increase in sales for the whole market. Volkswagen sales in Russia totalled 89,600 cars in 2017, an increase of 20.5% y/y, the company said on January 11.

Car sales were badly hit by the 2008 crisis and only started growing again at the start of last year. Volkswagen’s results are another sign of the reanimation of the market as not only did sales fall during the crisis but Russians traded down en masse to cheaper home-grown models; for most of the last year the best selling models of car were from Avtovaz, the maker of the iconic Lada. Prior to the crisis foreign cars dominated sales.

The whole market is expected to show a 10.8% increase in sales for 2017 to 1.58mn units, according to the Association of European Businesses (AEB) that tracks sales. New car sales in Russia rose by 15% in November 2017 compared to the same period the year before, according to the latest available AEB data. 

Volkswagen’s best selling brand was the Polo (48,600 cars) and Tiguan (27,700 cars), which are manufactured at the Kaluga-based Volkswagen Group Rus plant.

"In December, the brand demonstrated the best result over 2017: as many as 10,400 cars were sold to clients, or 36.6% more than in the same period of 2016 [7,600 cars]," the report said, reports TASS.

"The company brought to the market [a] special version of our bestsellers, developed favourable proposals for clients of Volkswagen, put into operation the digital concept into the brand’s dealer centres and organised efficient work of its service network, which made it possible to achieve such a result," the head of the Volkswagen sales department in Russia Yelena Smiganovskaya told Tass.

VW’s Kaluga-based plant has an annual capacity of 225,000 cars, and produces Polo Sedan, Tiguan and Skoda Rapid. VW has another facility on the territory of the GAZ car plant in Nizhny Novgorod with a designated capacity of 132,000 cars a year that supports the full cycle of car manufacturing for Skoda Yeti, Volkswagen Jetta and Skoda Octavia. The facility was put into operation in 2001.

In related news, Ford’s Russian joint venture Ford Sollers reported that its sales of SUVs and light vans were also up by half in 2017. 

Ford also announced that it was hiring 600 new workers at its Elabuga plant in the Russian republic of Tatarstan and has introduced a six-day week to meet growing demand. Ford makes the Kuga, Explorer and Transit models, and says it expects the recovery in the Russian auto market to continue into 2018.

BMW has also upped its game and finally registered a subsidiary in the Russian enclave of Kaliningrad called LLC BMW Rusland Automotive that was registered on December 25, 2017. A new plant is planned in Kaliningrad after BMW dithered for years on the timing for the new facility. 

The new plant will be a stand alone production facility. Originally it thought that the BMW facility would be included into the Autotor car production cluster in the enclave that already turns out about 30 different models for various international producers under license including BMW, Kia, Hyundai, TATA Daewoo, and FAW. The plant has been producing BMW cars on a large scale since 1999 and has a production capacity of 40,000 cars per year.