The Russian car giant GAZ claims that it can renew its range of models itself, without any foreign help
The Russian automobile company GAZ is currently undergoing more changes. It seems that the company decided to suspend the production of its Volga D vehicles and to focus attention on a more traditional class of cars, Volga E. In addition to that, the administration of the company announced that the company Fiat might not be a strategic partner for GAZ in the future.
The new General Director of GAZ, Aleksey Barantsev, said Friday that the company was not going to purchase the range of car models from Fiat. “We are capable of renewing our range of models ourselves,” Mr.Barantsev claimed.
In the meantime, GAZ promised to produce the new model of its Volga vehicle, of the middle class E. The new vehicle will still be called Volga, but the design of the car will take account of all previous mistakes that were made during the production of previous models. Next year, the Joint Stock Company GAZ is planning to spend some 500 million rubles for the modernization of its Volga cars. As Aleksey Barantsev stated, the objects of modernization would include hanger brackets and speed timing units first and foremost. The costs for these measures will make up 150 and 170 million rubles respectively. The changes will also embrace light technology and bumpers.
As far as the Volga D vehicle is concerned, it was earlier believed that class D of the vehicle would be in demand amid Russian middle class customers of GAZ. However, the creation of conditions for the production of this car at price of eight thousand dollars seemed to be less profitable for the company in comparison with the work on Volga E vehicles. Probably, the corrections were introduced with the approved concept of the Russian car industry development. It is obvious, if GAZ takes another orientation of its activity, another Russian car giant, the company AvtoVAZ, will have easier conditions after the increase of import tariffs on foreign cars (AvtoVAZ produces D class vehicles).
One has to guess, what world car giants will do, since they are as interested in the increase of import tariffs for second-hand cars, as Russian car producers are. The competitive ability of a certain Russian car producer will depend on the fact, if they attract investments for the development of either E or D class of cars in Russia. The situation also depends on the Russian government – to which extent it is ready to create better conditions for domestic car factories, rather than for foreign ones.
General Director of GAZ, Aleksey Barantsev, released those statements regarding the change of the company’s activities in Sergey Kiriyenko’s presence (the presidential envoy in the Volga administrative area of Russia). The envoy’s presence, as well as the statement from Barantsev had PR goals.
Kiriyenko said that he had arrived to visit the company GAZ in accordance with the instruction from President Putin. As Kiriyenko stated, Vladimir Putin wished to look into the matter with GAZ due to public attacks against the factory. Sergey Kiriyenko proved that the situation for the major company of the region was not easy indeed. Yet, the presidential envoy stressed out that the company's management found a correct solution. “Our company did not choose a way to cut people’s wages or raise more loans and save more debts against the background of the crisis on the car market,” said Barantsev. It should be mentioned here that Russian two major car producers, GAZ and AvtoVAZ experienced great difficulties on account of a large number of imported foreign cars. The excessive import of foreign cars was caused with uneasy situation concerning the concept of the Russian car industry development.
The GAZ management said that the company would cope with the output plan for the current year. The schedule stipulates for the production of 200 thousand cars a year. Furthermore, the enterprise paid its income tax this year – for the first time since 1999. According to the information from the press service of JSC GAZ, accounts payable of the enterprise dropped from 7.6 million rubles to 1.8 million. It was also said that the company managed to raise the average wages by 58%.
The protection effect on the part of the presidential envoy was intensified with the demonstration of the new Volga model – GAZ-3110, Volga-taxi. The new model of the Volga taxi allows to give more space for passengers in the back seat, as well as more space for luggage placement.
On the photo: Volga GAZ-3110
Translated by Dmitry Sudakov