AVTOVAZ
AVTOVAZ acquired a Nissan plant in St. Petersburg, Russia, transferring control for a nominal fee of one euro. Officially, the move shifts Nissan assets into AVTOVAZ’s hands, enabling operations at the site. The change of ownership is framed as a government-to-government stock shift, but the practical outcome is that production can begin on the site under AVTOVAZ management.
Back in the autumn planning phase, AVTOVAZ moved forward with partner negotiations before all paperwork was completed. Talks with potential Chinese partners progressed to concrete agreements. The essential idea is to build capacity and establish a local manufacturing footprint that leverages existing expertise and supplier networks.
This year roughly 10,000 vehicles are expected to roll off the line, a figure confirmed by Maxim Sokolov, the head of AVTOVAZ. The initial timeline pointed to year-end production, but given the rapid pace of developments, it appears that the first cars could be ready by summer. The project focuses on ready-to-assemble vehicles rather than fully built cars originating from AVTOVAZ’s own design identity at this stage.
The produced vehicles will not bear a traditional AVTOVAZ badge at every step. They will be assembled using a knocked-down kit approach (SKD) with domestic components, similar to some other urban manufacturing models in Russia. Beginning in 2024, AVTOVAZ aims to steadily deepen localization by incorporating components sourced from regional suppliers who have previously contributed to Nissan, Hyundai, and other Russian factories.
If production volumes for each model reach a sustainable level of 20,000 to 30,000 units annually, the plan envisions progressing toward a full-scale production line. That progression would include welding and body painting, potentially starting in 2025. In the current year, three models are slated for assembly: a sedan and two larger crossovers classified as class C and D, meaning larger and more premium than the current Lada lineup. The new models are positioned to rival vehicles like the Hyundai Elantra or Nissan Qashqai and X-Trail, marking a shift in the Lada catalog toward larger, more feature-rich cars.
The strategic aim appears to avoid cannibalizing existing models such as Vesta and Largus while resisting competition from other manufacturers in these segments. The goal is to offer buyers larger cars featuring Lada branding, backed by factory warranties and relatively affordable service and spare parts, thereby preserving market share and attracting new customers.
AFK SYSTEM
AFK Sistema, the investment arm involved in the program, has signaled strong interest in the Kaluga plant belonging to the Volkswagen group. Sources indicate that the investor wants to preserve the current car production profile and potentially sustain Volkswagen’s presence in Russia alongside its local operations.
Volkswagen has approached Russia with a cautious stance since February 24, 2022. The company’s total investments in the country exceed 1.5 billion euros, underscoring the stakes involved in maintaining a production footprint despite geopolitical headwinds.
Volkswagen operates under strict corporate governance rules, and there is little appetite for circumventing sanctions or engaging in covert schemes. The history of Dieselgate remains a reminder of the risks involved. Nor is there support for circumventing European sanctions, which are now codified into law. Some alternative routes have been discussed, such as routing components via Turkey or the United Arab Emirates, but those options would necessitate substantial changes in branding, decals, or the product lineup.
For instance, Jetta was introduced in China in 2019 as a way to offer European-style cars with a slightly different look. Similar adaptations have occurred with Skoda models—Karoq rebranded as Jetta VS7, and Rapid transformed into Jetta VA3. Adjustments like reduced chrome and streamlined finishes help lower costs while maintaining appeal. The idea of producing something akin to Volkswagen size and capability, under a different badge, is discussed in industry circles as a potential path forward.
MOSKVICH
The Moskvich program is advancing toward real localization, according to Dmitry Pronin, the plant director. While details remain to be announced, there is confidence that by the end of the year the factory could master welding and body painting processes, initially using imported body parts as a bridge to full domestic production.
Timing hinges on the procurement of stamps, which are forecast to take at least a year. When stamps become available, the plan is to stamp all body panels at the AAT plant in Moscow’s Biryulyovo district. Panels for Duster, Kaptur, and Arkana are already produced there, and that capacity is now supporting the domestic Haval program as well. The Moskvich initiative also encompasses plastics, interior components, tires, and operating fluids to complete the vehicle program.
AUTOTOR
Autotor has achieved notable success in reorganizing production within the passenger-vehicle segment. The plant now features a wide model mix and is poised for active expansion this year. The first journalist encounter with the Kaiyi E5 sedan hints at broader coverage to come, with detailed discussion slated to follow.
Prospects for the automotive sector remain upbeat, and a steady stream of announcements is expected throughout the year.
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