GM-Avtovaz JV's Chevy-Niva SUV Model Sales Delayed

MOSCOW -October 24, 2002; Dow Jones reported that GM-Avtovaz, a joint venture of General Motors Corp. and OAO Avtovaz has missed its Wednesday sales-launch deadline for the Chevy-Niva sports utility vehicle, auto dealers said Thursday.

Four of the joint venture's 18 official dealers said they now expect to start Chevy-Niva sales in December and two said sales would start next year.

A GM-Avtovaz spokesman said a company official wouldn't be available to comment on the matter until Friday.

GM-Avtovaz has made the largest investment in the Russian automotive sector, of $332 million.

"GM-Avtovaz has only signed agreements with official dealers last week, and is now waiting for all the documentation to be processed," said Alexander Bruk, deputy head of Avtomir, an official dealer of Avtovaz. Bruk said there was also concern over pricing uncertainty.

"(Vladimir) Kadannikov (general director of Avtovaz) has already said that the SUV will be more expensive than the previously planned $8,000, but hasn't indicated by how much," Bruk said.

"The likeliest reason is that the JV might still be having problems with the quality of the parts," Vyacheslav Smolyaninov, automotive analyst at Nikoil, said.

GM representatives have said quality control would be very tight.

Maxim Matveev, automotive analyst at Alfa Bank, said the sales delay wasn't a significant problem.

"GM-Avtovaz plans to sell only around 460 cars by the end of the year, and they can produce that in less than a week. Their current task is to make sure the production quality is up to scratch and to sign dealership agreements," Matveev said.

Smolyaninov said production of the model had begun a year later than scheduled.

Company Web sites: http://www.vaz.ru; http://www.gm.com