French auto giant Renault Monday inaugurated its upgraded Avtoframos plant in Moscow where annual capacity has been doubled to 160,000 vehicles in a key market the company believes has bottomed out.
Renault chief executive Carlos Ghosn and Moscow city mayor Yury Luzhkov officially opened the facilities at the plant which the French company acquired when it bought Avtoframos.
Ghosn said Renault has responded to the need for “robust and affordable cars in Russia.
“We think that the market in Russia has bottomed out at the 1.4 million cars reached in 2009…. Now we should see a recovery,” he added.
The upgrade cost 150 million euros (204 million dollars), on top of the initial plant investment of 230 million euros, Renault said.
The plant will add the Sandero model to the Logan it was already making.
“Moscovites really like the Sandero, it is a very modern and comfortable car,” Luzhkov said.
Renault said in a statement that Russia remains a “strategic market” for the company given its enormous potential and despite the near 50 percent plunge in output last year as the global financial crisis slashed demand.
“There are 230 vehicles for every 1,000 inhabitants in Russia while in Western Europe it is 600 vehicles per 1,000 inhabitants,” it noted.
Renault is also present in Russia via its 25 percent stake in Avtovaz, the country’s largest automaker whose future was very much in doubt last year as the market tumbled.
Ghosn later met Russian Prime Minister Vladimir Putin who said he was happy with Renault’s presence and its support for Avtovaz.
“We are grateful to you for your help in developing the company and the proposals you have drawn up for Avtovaz,” Putin said.
Avtovaz, known as the maker of the Lada, is weighed down by massive debt of 62 billion rubles (1.52 billion euros, 2.07 billion dollars).
In November, Renault pledged technical and other assistance worth 240 million euros for Avtovaz.
“Avtovaz will be able to turn the situation around” and become a major player in the Russian market, Ghosn said.
