Cheaper cars lose out most in Russian sales drop

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MOSCOW--The biggest Russian passenger car retailer, LogoVAZ, has reported a significant sales drop in 1998 to $150 million.

Director General Yuly Dubov said the biggest impact was on cars aimed at the middle classes. Those with "new money"--the "nouveau riches"--remain the biggest car purchasers in Russia, he said.

Around 3,700 imported cars were sold through Logovaz outlets in 1998, around 20% fewer than in 1997. According to Mr. Dubov's forecasts, the company will sell just 3000 cars this year.

Mr. Dubov said the most expensive foreign cars, including Mercedes-Benz models and executive Volvo limousines, were those whose sales have been hardly affected by the economic crisis. The Korean Daewoo, produced in Uzbekistan, was the company's top-selling model.

At the other end of the scale, Russian-produced Lada cars are gradually losing market share. LogoVAZ managed to sell just 1,000 Ladas last year, compared with the 50,000 it sold in 1995--and despite its sharp price decrease from $5,000-to-$6,000 at the beginning of 1998 to $2,000 in the fall of that year. "Most of the clients willing to buy a Mercedes simply will not spend their money on 10 Ladas instead," said Mr. Dubov.

Expansion is now one of LogoVAZ's major priorities. It plans to add new sales offices in Siberia to itsexisting 16 offices scattered across the major cities of Central Russia.

Copyright April 1999, Crain Communications Inc.

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