Renault will produce an entirely new vehicle in Russia as of 2005
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Renault has decided to accelerate its expansion in Russia by investing E230 million in the local production and marketing of its future X90 vehicle, starting in mid-2005. The production line – to be set up in Moscow at the plant belonging to Avtoframos, a subsidiary which is owned 62% by Renault and 38% by the City of Moscow – will have a capacity of 60,000 vehicles a year.
Positive developments in the economic, regulatory and political environment have decided Renault, five years after its return to Russia, to move on to the second stage of its plan to boost its market presence, with a local production project and major sales objectives.
With almost 1.5 million units sold in 2002, including 900,000 produced in Russia, the Russian automobile market is growing an average 10% per year. Over 80% of vehicles sold on the market are priced at under USD10,000.
To position itself at the core of the market, where demand is for modern but economical vehicles, Renault is innovating by choosing Moscow for the production of its future X90 vehicle, which is currently being developed by Renault's vehicle and powertrain engineering teams in France. The X90 will use a platform derived from the Renault-Nissan Alliance B platform, and benefit from all Renault's technological expertise both for powertrain and chassis. Modern and attractive, a very spacious family saloon, the X90 will be designed for reliability and simplicity of use in countries where infrastructures still vary in quality and climatic conditions are often severe. It will offer a competitively-priced package, with a high level of equipment, adapted to meet the needs of Russian customers formobility and a range of uses.
The X90, which will be the first model in a wider range, has been purposely designed for countries with a strong demand for economical cars built to top international standards. It is set to play a key role in the Renault group's growth strategy, as evidenced by its industrial launch in two countries within the space of a few months. The X90 will first be produced at the end of 2004 at the Dacia plant in Pitesti, Romania. It will then go into production at a second assembly site which has just been decided on in Russia.
Production output of 60,000 vehicles The assembly and marketing in Russia of the X90 with an investment of €230 million, reflects Renault's confidence in the development potential of the Russian market. The investment will cover the installation of production lines in the Avtoframos plant in Moscow, and the development of the sales network and support functions. Equipped with sheet metal, paint and final assembly shops, the Moscow site will be able to employ up to 2,000 people when operating at full capacity. The plant will gradually draw on local subcontracting possibilities. Initial production capacity is 60,000 vehicles a year, a rate which should be reached after two to three years of operation.
The Avtoframos plant currently carries out final assembly of Clio Symbol at a rate of some ten vehicles per day. Number one in its segment, 3,912 units of this model were sold in 2002. The final assembly of Clio Symbol will continue until the X90 comes onstream. The Renault range is marketed in Russia through a network of 61 points of sale. With almost 8,400 vehicles sold in 2002, a rise of 48.7%, Renault was number three in the car imports table in 2002 with a 7.7% market share. In the medium term Renault is looking for annual sales volumes of some 100,000 vehicles (comprising both imports and locally assembled models). Avtoframos was founded in 1998 as a joint venture equally-owned by Renault and the City of Moscow. To date, Renault has made a cash contribution of USD106.5 million to the company, with the city authorities contributing USD70.4 million in assets (mainly land). Following the recent capital increase on October 11, 2002 Renault's stake now stands at 62%, with 38% in the hands of the city authorities. Equity stakes will change as a result of capital increases required to finance investments.
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