MOSCOW (Bloomberg) -- Lada, Russia’s biggest car brand, has become a favorite in Crimea after its annexation by Vladimir Putin’s government. Having little competition helps.
AvtoVAZ, the maker of Lada cars, is enjoying booming demand in the Black Sea peninsula after international automakers vacated the contested region for fear of sanctions. Such concerns aren’t bothering AvtoVAZ, which enjoys close ties to the Kremlin even if Renault and Nissan Motor Corp. control a majority stake in the Russian automaker.
“We aren’t losing our time analyzing geopolitical issues if they don’t touch us directly,” said Vladimir Stepanov, an AvtoVAZ spokesman. “We have too much work to do.”
While the Russian automaker pushes to take advantage of opportunities in Crimea, Renault is caught in no man’s land and has suspended work at its own dealers in the region. The company can’t afford to rein in AvtoVAZ, which is a key part of its expansion in emerging markets. At the same time, Renault is 15 percent owned by the French government, which has been vocal in supporting tougher sanctions against Russia.
The first official Lada dealer opened in October and Crimean customers are now ordering 200 to 300 Lada cars a month, said Andrey Kudrin, director of the dealership. In 2013, when Crimea was part of Ukraine, China’s Geely was the biggest brand, while Lada’s sales totaled only 155 cars, according to Autostat.
“Demand for Lada cars is very high,” Kudrin said.
AvtoVAZ CEO Bo Andersson participated in the opening ceremony of the dealership, one of the few official sales outlets in the region. Companies such as McDonald’s Corp. canceled business in the region. Apple Inc. products aren’t available in stores and Google Inc.’s services aren’t accessible on the peninsula.
“European or American car producers won’t risk opening car dealerships in Crimea,” said Oleg Datskiv, CEO at Auto-dealer.ru. “The market is too tiny.”
For AvtoVAZ -- which is partly owned by Russian state-held company Rostec -- every little bit helps. As Russia slides into a recession, car sales in the country are forecast to plunge about 24 percent this year after dropping 10 percent in 2014. In Russia, the brand delivered about 387,300 cars last year, giving it a 16 percent share of the market.
For 2015, AvtoVAZ expects to sell 3,000 Ladas in Crimea. That could help the company’s total deliveries rise 1 percent to 2 percent, said Andrey Rozhkov, an analyst at Metropol.
Lada sales in Crimea currently account for about 40 percent of the region’s demand, Kudrin said.
While AvtoVAZ expands in Crimea, Renault suspended work at dealerships in Simferopol and Sevastopol and is weighing ways to service clients in the region, said Ekaterina Tretyakova, a Renault spokeswoman in Moscow.
She declined to comment on AvtoVAZ’s activities in Crimea, while requests made to Renault’s headquarters in France were referred to its Russian partner.