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Russia's automobile market is growing fast, with some 3.19 million cars expected to be sold there this year, up from one million in 2002 -- more than three-fold growth in just six years. In fact Russia has become the world's fifth largest auto market, after the U.S., China, Japan and Germany.
Russia is such a bonanza for global carmakers that it's being called the "second China." But unlike Beijing, Moscow doesn't require foreign firms to set up 50-percent joint operations with domestic companies. And while consumers in the mature markets of Europe, Japan and the U.S. are increasingly turning away from larger cars due to stringent environmental regulations and high gas prices, in Russia the nouveau riche, flush with oil money, are eager for big luxury cars. So plentiful are automobiles that traffic congestion is a day-long event in the metropolitan areas of Moscow and St. Petersburg.
With circumstances like these, it's little wonder carmakers are advancing into Russia. This is one of the few countries in the world where nearly all the major global carmakers are competing with few restrictions, according to Dmitri Sergeyev, a branch chief of Russia's biggest auto dealer Rolf. He says companies that succeed in Russia have a shot at making it in the global market.
Even more enticing to outside carmakers is the fact that Russia has no proper domestic car brand, except for AvtoVAZ, maker of the low quality Lada. And while global firms have exported autos to Russia, these days many manufacturers are building local plants.
Ford, which became one of the first to build a plant in St. Petersburg in 2002, has made it's locally-produced Focus into a popular seller. Renault, which began producing its Logan compact in Moscow in 1999, is also rising as a market leader.
Toyota has been producing the Camry at a local plant since late last year and plans to open more plants across Russia in a few years, aiming for annual production capacity of 300,000 units. General Motors, Nissan and Suzuki will all complete plants for finished cars by late 2009 while Volkswagen will also begin manufacturing 150,000 cars in Moscow from next year.
Korea's Hyundai Motor has been operating a 180,000-unit capacity assembly and production plant in Russia since 2001. On Thursday Hyundai broke ground on a 100,000-unit capacity finished car plant in Kamenka in St. Petersburg, making it rather late to join the global competition, as the tenth foreign carmaker. By the time Hyundai produces its first finished car at the plant in 2011, the foreign carmakers there will be able to produce a total of 1.3 million units per year.
But Hyundai's performance in Russia has been promising. As of April, it ranks second in sales among imported brands, behind GM's Chevrolet, with a 7 percent market share and high quality satisfaction.
It remains to be seen whether that performance can be sustained amid the unlimited competition of market leaders. Vladimir Melnikov, a reporter for the prominent domestic journal Auto Review, expressed optimism. Meeting with the Chosun Ilbo in St. Petersburg, he said Hyundai has successfully planted a reputation for reliability in Russia and could well survive the cutthroat competition. But noting the 10 percent price gap with similar models by market leaders like Toyota, he said Hyundai must invest in sharpening its image as a high-end brand if it is to continue its run in Russia for long.
(englishnews@chosun.com )
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