Bartek S.
Aerodynamic Ace
KALUGA, Russia — Volkswagen, Europe's largest auto company, on Wednesday launched production at a new ultramodern plant here, about 75 miles south of Moscow, hoping to become a serious player in the booming Russian automobile market.
Volkswagen is starting with kit assembly of the Passat sedan and the Skoda Octavia in the spring. The company said Thursday that new cars will only be on sale in Russia early next year, "after building sizable stock." No model will be sold in Russia priced above $15,000, VW vows.
The company later plans to add production of the Skoda Fabia and a Russian remake of the VW Polo model, expected to be priced in the $10,000 range.
When fully operational mid 2009, the factory will churn out seven models. Among them will be VW's Jetta sedan, Passat, Tiguan and Touareg, and two Skoda models, the Octavia sedan and the Fabia hatchback.
The carmaker plans to build 66,000 cars at the plant next year, but total capacity is 115,000 cars annually, which could be boosted to 150,000 cars later. VW will invest $750 million and plans to employ about 5,000 people when the plant is fully up and running.
This would boost its share of the Russian market to 10 percent in 2010 from the current 3 percent. The Volkswagen brand currently ranks 14th in Russian car sales, while Skoda is 16th.
Volkswagen's foray into the Russian market follows hard on the heels of Ford, Renault and Kia Motors, all of which are already assembling cars in Russia. Both Ford and Renault have beefed up budgets to catch up with high demand for their products.
Toyota launches Camry production next month in St. Petersburg, and General Motors will start production of its Chevrolet Captiva and Antara in fall 2008.
What this means to you: Easy access to credit is causing a car boom in Russia, and VW is smart to grab its piece of the action. — Tai Adelaja, Correspondent
http://www.edmunds.com/insideline/do/News/articleId=123778#2
