Russia is to introduce Euro 3 standards for light duty vehicles on January 1st, 2008. This means that all the vehicles made in the country will have to comply with European safety and environmental norms. As a result, prices of cars made in Russia will grow, as their competitiveness will fall.
The UAZ was the first Russian car maker that reported its transition to Euro 3 standard (and the extra expenses caused by it). The holding’s representatives said UAZ vehicles will become about $ 200 more expensive already on Octoder 1st. In the future, there price will increase by $ 400 to 800. Production lines at the UAZ are already being created for the future Euro 3 engines, and the first batch of vehicles with such engines has been already assembled.
Other Russian producers are expected to follow the UAZ’ example in the nearest future. Russian production facilities that make foreign cars of assemble them from imported parts are now in a more advantageous position, as their production already complies with Euro 3 norm. But AvtoVAZ and GAZ will have to upgrade their production lines, meaning the cars will become more expensive. Their managers, though, say they are ready for the change, and there will be no problem upgrading their recent model with gas neutralization systems and other environment-friendly equipment.
What seems to be harder is upgrading the ‘classic’ cars designed 20 or 30 years ago. AvtoVAZ managers has recently stated it will soon stop producing some of the old models, concentrating on more recent Lada Samara and Lada Kalina ranges, promising they will be even cheaper (Kalina is to cost about $ 8 000). On the other hand, the ‘classic’ cars cost $ 5 to 7 thousand and are more popular.
Alexei Sorokin, AvtoVAZ director for executive marketing, told Expert Online his plant manages to keep prices down and cut its expenditures. AvtoVAZ hasn’t raised prices of its products for almost a year, Sorokin says, and as a result, sales in August 2007 cut the ercord of a few years. Commenting on the future introduction of Euro 3 standard, he said the plant ‘will try’ to keep the prices down.
Last year, Russia imposed the older Euro 2 standard, which made cars from GAZ and UAZ about $ 600 more expensive.
But in fact, transition to new standards of environmental safety is inevitable. Euro 3 norms where introduced in the EU back in 2000, and in 2005 all vehicle production facilities implemented the new Euro 4 standards, 65 – 70 % stricter than the previous.
When the new norms are introduced in Russia, it will surely result in more competition between Russian and foreign car brands (including those assembled in the country). The narrow price gap between Russian cars and budget Japanese and European vehicles will shrink, and AvtoVAZ and others will have nothing left to do but create new models, offering consumers European-level, but all-Russian cars.
Photo: Comstock complete/Fotolink
Denis Kvasov
http://eng.expert.ru/
