Lada-branded cars have ruled the Russian car market since their creation under AvtoVAZ over 40 years ago, so it may be a bitter pill to swallow for some Russians to learn that a model from a foreign automaker could soon become the country's best-selling car, for the first time.
First-quarter sales published this week by the Association for European Businesses (AEB) show that Lada still leads the market with the Kalina subcompact and Priora compact models, at 27,820 and 27,433 units respectively, but South Korea's Hyundai sold 27,072 Solaris compact sedans in the same period. That is just 748 cars less than the best-selling Kalina.
More significantly perhaps, Solaris sales grew by 166 percent in the first three months, while Kalina demand declined by 11 percent and Priora demand by 3 percent, according to the AEB.
The success of the Solaris clearly reflects a Russian market which is evolving from generating huge volumes with basic motorization - the aged Lada models – to one seeking more refined foreign products.
Based on the Hyundai Elantra, the Solaris is an Eastern Europe-specific compact sedan locally built for the Russian market.
It is not the only South Korean product making waves in Russia. Kia took fifth place in the sales stakes with the Rio, selling 18,135 units in the quarter, ahead of another locally built foreign model, the Ford Focus in fourth place with 19,597 units.
In overall sales too, Hyundai is chasing Nissan, the second best-selling brand in Russia after Lada and the No. 1 foreign carmaker. In the quarter, Hyundai sold 41,174 units versus Nissan's 42,117. A difference of 943 cars. Kia was No. 4, selling 39,310 units to pass Nissan's partner Renault by just 7 cars.
Lada is not taking the challenge lying down. Thanks to its alliance partner Renault, which currently owns 25 percent of AvtoVAZ, the automaker is preparing a complete overhaul of its product range by 2016, beginning early this year with the Largus, a rebadged Dacia Logan MCV wagon.
Renault and Nissan are also discussing how and when to grow their share of AvtoVAZ to take a controlling stake into Russia's largest automaker and steer its future destiny.
And there is a lot at stake. While sales in Western Europe are set to decline by 6.4 percent to 11.99 million units this year according to LMC Automotive, Moscow-based AEB forecasts an overall 12 percent rise in Russian sales to 2.8 million, close to the pre-crisis mark of 2.9 million in 2008.
Russia remains the one bright spot in the European sales region and this could be a big threat to Lada's future dominance of the market.