At a meeting between AvtoVAZ’s management and a delegation from Chechnya’s Industry and Energy Ministry the latter proposed setting up the assembly of VAZ models on the base of the Pishchmash factory in the town of Argun. The republic’s authorities expect to see the first Chechen-produced car come off the assembly line in May this year.
The Pishchmash factory in Argun covers an area of 19 hectares. In Soviet times it produced a diverse range of equipment for the food industry. At the time, Ukraine’s Malyshev factory (in Kharkov) supplied the components. But at the beginning of the 90s production ties were destroyed, and the factory virtually ceased to exist. The republic’s present leadership have set the task of restoring the factory. Today, it produces water towers, heating boilers, fireguards, gates and other metal products.
At the end of last year, representatives of Argun’s Pishchemash factory succeeded in reaching an agreement with AvtoVAZ on assembling Russian Niva cars there. Preparations for importing spare parts and the equipment necessary for assembling the cars are now in full swing. The plant is expected to start assembling the Lada 2107 and the Niva. By 2010-2011 the company plans to increase the production of cars in Chechnya to 30,000 a year.
At the meeting AvtoVAZ’s president, Boris Alyoshin, said that it is necessary to develop a strategy for joint action on promoting the Lada brand on the car market in the Chechen Republic.
The caution of AvtoVAZ’z management is understandable. From an economic point of view setting up the assembly of Lada cars in Chechnya is not attractive. Expanding production is unlikely to be considered - AvtoVAZ could increase the volume of production itself. In addition, cooperation in such an unprofitable business as manufacturing a “classic” will mean that either VAZ will supply components at cost and not make money on this, or that the Chechen business will operate at a loss, which is very unlikely as that deprives the whole project of any sense.
But if we talk about developing the market in the Chechen Republic, it is unlikely that the positioning here of assembly production will increase sales of Lada cars. Wealthy Chechens prefer foreign-made off-road vehicles, and the rest will not be able to buy even the cheapest of VAZ’s seven range.
Obviously, the reasons for such cooperation must be sought outside of the economic sphere. Most likely, AvtoVAZ, being practically a state business, is simply being used to create more jobs in Chechnya. Indeed, the head of the republic, Ramzan Kadyrov, does not hide this. When signing the agreement with representatives of the Samara region and AvtoVAZ, he said that the project will provide jobs for about 8,000 people in Chechnya. This is the “social responsibility of business.”
Despite regular price increases by AvtoVAZ and the creation of increasingly expensive models, the quality of cars from Togliatti leaves much to be desired. Having got yourself a car assembled in not fully comprehensible technological conditions - god alone knows on what equipment - by people who previously produced equipment for the food industry, you automatically start thinking about its safety. In terms of image the project is already doomed to failure. It is unlikely that any potential VAZ buyers will want to buy a car assembled in Chechnya. Indeed, the decision to set up production at the Pishchemash factory is provoking mocking smiles.
Denis Kvasov
Photo: lada-auto.ru
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