GAZ Siber: a difficult start

MOSCOW. (RIA Novosti economic commentator Oleg Mityayev) - Russian automaker GAZ Group announced in early January that it would launch production of its new Siber car, priced at $18,000-$25,000, on March 28.

Siber cars will be produced at its Nizhny Novgorod facility in the Volga area. The new D class vehicle based on the Chrysler platform, acquired by the Russian company in April 2006, was to be marketed in June.

However, GAZ, which is part of billionaire Oleg Deripaska's industrial empire, has recently announced that Siber production will start only this summer, and marketing has been postponed until September.

Many foreign carmakers are building assembly plants in Russia. To survive in these conditions, most Russian producers are setting up joint ventures with foreign partners or selling stakes to them. Back in 2002, Russia's largest car producer AvtoVAZ set up the GM-AvtoVAZ venture with General Motors. In late February 2008, it sold a blocking stake (25% plus one share) to France's Renault.

Moving contrary to the tide, GAZ, Russia's largest manufacturer of commercial vehicles, is buying foreign assets, although not top quality. In 2006, it bought LDV, Britain's last remaining independent van maker, and the Sebring platform from DaimlerChrysler, although soon after the company split, together with the assembly equipment, for $150 million.

GAZ Siber is a revamped model of Chrysler Sebring, which had been on the market since the early 21st century. The D class vehicle is luxurious for Russia, with a 2-liter engine that produces 141 horsepower, an air conditioner, two airbags, antilock braking system, an audio system with six speakers, anti-fog lights, and other niceties.

GAZ has driven itself into a corner by promising to start production early. Equipment from the American plant was delivered to Nizhny Novgorod in late 2007, leaving only two months for its assembly. A pilot batch of Siber cars was to be assembled in March, with serial production scheduled for March 28.

It took Ford Russia seven months to launch production, and Toyota spent four months on preparations.

Anyway, the assembly of the conveyor and other equipment at GAZ's plant in Nizhny Novgorod has been put off several times, in part because the relevant documents had to be translated from English into Russian.

The company's officials say the pilot batch of Siber should be assembled in late March, serial production is to begin in July, and sales in September. GAZ will be able to produce only 12,000 out of the initially planned 20,000 Sibers this year.

But it will have more problems with its new car, because it will be assembled from parts made in the United States. It is not profitable for suppliers to transfer the production of rather modest volumes of car parts to Russia, and so GAZ will have to pay through the nose for their delivery. This is why it has set a rather vague price range for the car, between $18,000 and $25,000.

The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.

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