Forget Europe (for now), Chinese surge into Russia

MOSCOW AUTO SHOW -Weaker regulations on safety, pollution spark model flood into Russian market

By Luca Ciferri, Automotive News Europe

Moscow, Russia If you are wondering why there are so few Chinese automakers at this month's IAA in Frankfurt the answer lies 2300km to the east.

Twenty-two Chinese brands exhibited more than 60 different models during the auto show here last month.

How dominant were the Chinese at the show? Every 25 metres there was a stand displaying models from brands such as Chery Automobile, Nanjing Automobile, Brilliance, Shanghai Maple and Lifan.

“We want to promote ourselves to the Russian market,” a spokesman for Nanjing's MG division said.

Nanjing Automobile showed its MG7 sedan and MG TF roadster. It will start MG7 sales in Russia in 2008, said Vice President Cao Xinping.

Regulations not so tough

The Chinese are here to claim a slice of a big market that is expected to grow exponentially in coming years.

But, equally important, they're here because their cars can meet Russia's emissions and safety regulations. Few of the models shown in Moscow could meet the EU's tougher regulations.

Another reason the Chinese are surging into Russia is because many people here are seeking affordable foreign models to replace their aging, outdated domestic cars.

In the first six months China exported 26,512 cars to Russia, up from 5,386 last year, according to Automotive Resources Asia.

Chery Automobile is the top-selling Chinese brand in Russia. Its sales soared 1337 percent to 18 558 in the first half.

Chery also is the first Chinese brand to establish a wholly owned sales subsidiary in Russia.

Why Russia?

• Easier emissions rules
• Fewer safety regulations
• Customers hungry for non-Russian cars

Chery's ambitions

CJSC, or Chery Automobile Rus, was established in Moscow in December 2005. The company began selling cars in June 2006.

In the first six months of 2006, Chery had sold 12,000 cars in Russia. Sales should total 45 000 units this year, said CJSJ general manager Gennady Pavlov.

Right now, Chery sells two aging models:

1. The Tiggo (an SUV that looks like the Toyota RAV4) for €12 450

2. The A15 Amulet (a near replica of the first-generation Seat Toledo sedan) for €7,200.

By year-end, Chery will add the Kimo A1 and QQ minicars.

Pavlov says the new models will help Chery meet its goal of 10 percent sales growth every year for the next five years.

Happy importers

Moscow-based Irito Cars of China distributes cars built by BYD, Great Wall (both began sales here in 2005) and Hafei.

The company also expects it sales to soar. “Last year, our Chinese brands sold 1,600 units in Russia, which will double this year to 3200 units and grow to 10 000 units next year,” said Irito spokesman Andrey Matveev.

Irito offers Chinese models that range in price from the €5700 BYD Flyer 2 hatchback to the €35 900, 6720mm long, 10-seat Great Wall Hover II limousine.

Moscow-based private importer Atlant-M Asia has the largest portfolio of Chinese brands.

The importer expects to sell 2,000 Chinese cars in 2008.

Meanwhile, Avtomir, one of Russia's largest dealer groups, will begin distributing Lifan cars starting later this month. Its aim is to sell 800 units by year-end and 10 000 in 2008.

Alysha Webb contributed

From Automotive News Europe (A Crain publication)