Russia’s Ulyanovsk Automobile Plant (UAZ), which specializes in off-road vehicles designed to survive tough conditions, is looking to Soviet-era export markets in Latin America and Africa to help offset slow domestic sales as the country climbs out of the longest recession in two decades.
UAZ aims to increase the share of output destined for export from about 14 percent to 30 percent within the next three to five years, said its financial director, Mikhail Belobrov.
“We are focusing on emerging markets, many of our former partners from Soviet times,” Belobrov said in an interview in Moscow. “We are trying to rebuild these markets.”
UAZ is a unit of industrial holding Sollers that is based in Vladimir Lenin’s hometown of Ulyanovsk. Sollers also manufactures Ford and Mazda vehicles under joint ventures.
Russia’s car industry is reemerging from four straight years of decline that wiped out more than half of sales, according to the Association of European Businesses. While the AEB expects sales of new vehicles to increase 4 percent in 2017, there are few signs of a return to robust growth.
“The decline has come to an end but we don’t see any new consumer boom,” said Belobrov.
He said he expects a small increase in sales this year after UAZ’s 11 percent decline in 2016 to 51,000 vehicles.
Sollers reported net profit of 1.6 billion rubles ($27 million) in 2016, down from 3.1 billion rubles in 2015, as revenue slipped to 35.6 billion rubles last year from 38.3 billion rubles.
Belobrov said he expected profitability to remain flat this year but declined to give a specific forecast. UAZ’s share of the Russian car market was 3.4 percent in 2016, up from 2 percent in 2014.
New markets
UAZ this year restarted exports to Ecuador for the time since 1992. The carmaker is targeting other Latin American countries including Nicaragua, Bolivia and Mexico as well as African markets such as Ghana, Ivory Coast, Cameroon and Senegal. In Asia, UAZ made its first sales to China last year and is also eyeing Vietnam and Mongolia.
The automaker is counting on a price advantage after the ruble’s devaluation — its flagship midsize Patriot SUV sells in Russia for as little as $12,000. But it’s still got to overcome perceptions of inferior quality. Last year after President Vladimir Putin struggled to open the passenger door of a new UAZ Patriot, a general stepped in and ripped the handle off the vehicle.
