At the crossroad

15.10.2012

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Interview with Fabrice Cambolive, Renault S.A.

This article is published in partnership with Kontinent Sibir. Author: Alexander Mesarkishvily.

In the first half of 2012 nearly 100,000 new vehicles were sold in Siberia, it’s 24% higher than the same period last year and more than twice - before last. Nationwide market again shows more modest rates - 14% growth. Krasnoyarsk makes the greatest contribution to the common Siberian "piggy bank", it accounts for 22% of all regional sales and Novosibirsk by this indicator is almost on the heels of Kemerovo. Good current results provide autoretailers with the reason for optimism, on the other hand, no one feels stable, and most of the dealers are in painful anticipation about the way market will develop in the future.

In comparison with the first half of 2011, the list of top-10 Siberian brands underwent several changes, but leaders of the rating haven’t lost their positions. So, in terms of sales the 1st place holds permanent "AvtoVAZ". Despite more than two-fold advantage in comparison with the closest pursuer in the face of Toyota, Lada sales in Siberia felt down by 6%. And this is despite the fact that all other members of the Top-10 were able to increase their performance in the market. Wake-up call for the "AvtoVAZ" can be the fact that for the first time this brand sold less than Toyota in Irkutsk. These results are primarily due to downsizing of the state program utilization, which greatly helped the plant in crisis. "AvtoVAZ" understands its vulnerability, that‘s why the plant decided to win by increasing the quantity in Siberia. Thus, in the first half of the year Togliatti giant announced a doubling of the number of dealers in Novosibirsk, signed a letter of intent with up to three partners. So, in the next few years the number of authorized Lada outlets in Novosibirsk will increase to six salons. The first of them was opened by "SLK-Motors" on the site of the former "Avtoland." The following year, sales center will be opened by the current factory partner - "Autocentre" LLC, and in 2014 - GC "Max Motors." "AvtoVAZ" is also active in other cities in Siberia. So, in Omsk at the beginning of the year it began to work with the brand "Autocentre na Kordnom." This company was formerly one of the largest players in the local market, but the crisis has forced to suspend operations on dealer contracts.

The leader among foreign cars is still Toyota, though in the whole country, it’s only at the eighth line, besides it’s after Nissan. It can be stated that the company managed to recover from the last year tragedy in the Land of the Rising Sun, and to regain the lead, including Novosibirsk, "edging out» Hyundai for second place. It is also noteworthy that Toyota holds the 1st place among foreign cars, still having only one dealer in “million cities”, while KIA tries to win by the quantity. It’s also worth to notice that in the contrast to competitors not only one model but three ones provide Toyota’s sales, - as before, they are known from the secondary market Corolla, Camry, and RAV4.

However, the most important changes in the Siberian Top-10 can be considered a further strengthening of the Korean brands. So, mark Hyundai managed to leave behind such a strong contender as a Chevrolet, and to take third place in the "overall". In its turn KIA got ahead of Renault and took the fifth place in the ranking. Both brands demonstrate similar results everywhere in Russia, although KIA is already ahead of Hyundai. High positions of both brands are primarily conditioned by the presence of one "punch" budget model - at Hyundai it’s unquestionably, Solaris, which became the leader in sales of all cars, and at KIA - new Rio, which is built on a common platform with Solaris. But if Hyundai Solaris has 67% of all sales, significantly outperforming the other models, then the model KIA Rio is bought in 47% of cases. SUVs Hyundai ix35 and KIA Sportage sales are much more modest in both brands, but exactly they occupy the second line of popular brands in the model line of marks with the index 14% / 20% respectively.

As for the distribution network density in Siberia, in the first half of the year KIA basically continued to open already scheduled to run salons. In particular, at the beginning of the year brand reestablished it’s presence in Tomsk after the rejection to renewal of the contract with the dealer, "Velez-40", representing the interests of the brand since 1995. New dealer is the company "One Hundred Horses", which has opened a full-featured KIA salon in Tomsk. In the first half of the year KIA opened the second dealership in Novosibirsk – except for "Sarmat", affiliated with the famous Novosibirsk businessman Dmitry Malakhov "Avtostar-Asia" has also come to represent the interests of the brand. This year the third brand dealership will be opened in Novosibirsk. Michael Moshkin and Dmitry Novikov’s «Alt-Park» finishes its construction. This salon is located right opposite to IKEA at Vatutina street. These measures should help KIA to rise above the 7th line in Novosibirsk, where it is now. Hyundai, in its turn, together with its current partners, continues to open new stores and thereby to increase its presence and sales as the result. In particular, the launch of the second cabins has helped to rise in Krasnoyarsk from the 7th to the 3rd line, and in Omsk - from 5th to 3rd. In Barnaul, driven by one dealer Hyundai was able to occupy the 1st place among foreign cars. However, not everything is so good with the brand in Irkutsk, where Hyundai «kick backed" from the 5th to 8th place, but KIA has significantly strengthened its position.

In addition to Korean manufacturers Nissan has also improved its positions in the Top -10. From now it’s on the 6th place, which is one level higher than a year ago. Nissan has achieved this position thanks to off-road lineup. And it could be only better in 2013 with the new Nissan Almera made special for Russian market. Thus, a fifth of all sales of Japanese brands account for a small crossover Juke, which managed to overtake by this indicator, even permanent leader lineup Nissan – “older” model Qashqai. Full SUV X-Trail won third place in sales at Nissan. Exactly the presence of all-wheel drive cars in the line makes it possible to gain a foothold in Eastern Siberia. Thus, a fifth of all sales of Nissan in Siberia fell on Irkutsk, which surpassed by this indicator other cities in the region. "Agat-Avto" represents interests of the brand in the eastern city of Siberia, they opened fully functional brand salon last year. Nissan positions are going to be strengthened by Novosibirsk - in May Nissan will get the second official dealer in Novosibirsk in the face of newly formed company "Siberian Motors", which was able to win the tender and beat large local autoretailers, including "Max Motors" and federal players in the face of RRT. In this case, the owners of "Siberian Motors" are Moscow investors ("Renaissance Group"), and the Director - Oleg Manushevich, who previously held the position of managing director of the first Nissan dealer - GC "SLK-Motors." Thus, the Japanese brand has strengthened its positions in the region, but so far it’s only in the 8-th row in Novosibirsk. After the capital of Siberia Nissan plans to strengthen the position and to find a second partner in Krasnoyarsk, now the respective tender is held there. In other cities of Siberia Nissan managed to strengthen its positions with current partners. In particular, Nissan managed to get up in Tomsk from the 10th to the 6th place. However, it’s not typical for all cities. So, on this background the brand lost a bit in Omsk, moving from 4 th to 6 th place.

German Volkswagen has also carried obvious leap, moved up from 11th to 8th place and grew by 114%. Thus the brand managed to make a little bit closer to its average Russian level (6-th place). The main "driver" of the Germans growth, as in the case of Hyundai, was the presence of a budget car range - Polo Sedan. Compact SUV Tiguan in comparison with other models has rather big sales. Regarding the development of the dealer network, in the first half of the year the brand launched the second official dealer in Novosibirsk - GC "Avtomir", which began to use aggressive marketing and advertising policies. It’s noteworthy that in other Siberian cities at the appointment of the second dealer priorities were given to current partners, but in Novosibirsk Volkswagen decided not to "put all eggs in one basket." However, the first dealer of the brand - SC "Max Motors" - sees no problem in the emergence of a competitor, on the contrary, he notices that in such a situation you can’t sit still, you need to move forward and to improve your business. Such competition has helped the brand - so, Volkswagen came on the 6th place in sales in Novosibirsk for the first time. As www.winnvolkswagen.com reports, the brand also has the potential to strengthen in Tomsk, where Volkswagen has opened a full-featured salon. The fact that the brand is in the Top-10 in Kemerovo, located right on the 7 th row, can also be considered as a positive indicator.

Against this background, Renault, Ford and Chevrolet positions weakened. The French brand was growing at the same rate as the market itself, while its rivals showed a remarkable performance. Budgetary Logan can’t help Renault because of competition with Hyundai Solaris, KIA Rio and Volkswagen Polo Sedan. As a result, the French brand "kickbacks" from the 5th place to the 7th. However, according to one year results Renault has all chances to restore the position. There are lots of brand deficient models, the queue for which range from a few months to half a year.

In the case of finding the solution of quotas problem, as well as stabilizing the supply Renault may become obvious pretender for the leadership. Also in favor of the brand the number of dealers has increased. In the first half of 2012 the Renault together with "Avtomir" finally launched full-dealer center in Novosibirsk, and is preparing to open another salon ("Max Motors"). As a result, now brand has risen from the 6th to the 4th place in Novosibirsk.

Ford has also weakened its positions. Despite steadily selling Focus model (78% of total sales), it just closes the top ten. The brand has the best positions in Krasnoyarsk, where it occupies the 7 th place, although a year ago it was at higher third place. In Novosibirsk, even by the efforts of two strong brand dealers it’s still only the 11th in the overall rankings.

Finally, Chevrolet in Siberia feels more and more competitive impacts from Hyundai and KIA, it’s only at the 5 th place in the ranking. So far Niva and well launched Cruze rescued the U.S. brand. However, taking into account the vast array of the Koreans, Chevrolet needs to take active steps to retrieve the positions, especially because in the whole Russia the brand is on a high 3rd place. In the first half of the year Chevrolet ventured to double its presence in Barnaul and Irkutsk. As a result, in the eastern city of Siberia the brand moved up from 8th to 5th place for the first time. Chevrolet has rather high data in Tomsk where it’s the leader among foreign cars. However, Chevrolet plans to go all-in, and to continue to expand its presence at the market. According to unconfirmed reports, the company wants to appoint the 3rd dealer, as KIA did. Such a move is under a completely logical reason - if earlier the brand claimed the leading position in the region, in the first half it takes only the 5 th place in the city.

Premium brands
The premium segment of the car market traditionally grows faster than the market in average. Growth rates for the first half amounted by not less than 42%, and if we take as a reference the same period in 2010, the figure will be as much as 82%. If in the whole Russia Mercedes-Benz is first, and after it there are BMW and Audi, in Siberia the situation is opposite.
Thus, the leader among luxury brands in terms of sales still remains Audi, although the gap from the competitors is not so obvious. So, if you look at the situation in the context of cities, Audi keeps the 1st place only in Kemerovo. In Krasnoyarsk and Novosibirsk the brand inferiors to Lexus, and in Irkutsk it stayed even behind such brand as Land Rover. Among the Audi buyers compact SUV Q3 and Q5, and the business sedan A6 have the greatest demand. Each of them makes about 20% of total sales of the brand.

BMW keeps the second place in the absolute ranking, which grew by 48% compared to the same period last year. German mark is liked most of all in Krasnoyarsk, in which "settles" a third of all cars sold in Siberia. Among other cities, Irkutsk and Novosibirsk are loyal to German brands. When brand is viewed in the context of its lineup, the "headliner" of the brand are crossovers X1 and X3, and the sedan 3-series. Each of these models accounts for a quarter of all BMW sales.
Mercedes-Benz rounds out the “top three”. Launching of a dealer in Irkutsk in the face of “Pervaya avtokolonna” allowed to the brand to become the leader of sales in Eastern Siberia and thus strengthened its positions in the region. Another traditional “pillar” of Mercedes-Benz in Siberia is "STS-Cars", representing the German brand in Novosibirsk, Kemerovo, Novokuznetsk and Tomsk. It’s noteworthy that unlike the nearest competitors, the leading range of models doesn’t include SUVs, it consists of the C-Class and E-Class sedans, each of them accounts for about a third of sales. However, we shouldn’t forget about the SUV GLK, which is demanded at the market.

In the fourth place of the rating is Lexus, but its not so highly positions are mostly due to less extensive dealer network. In cities where the brand has an authorized dealer or an authorized partner, Lexus shows very good results. Thus, in the “overall classification” “SLK-Motors’ was able to take the first place among all the dealers of premium brands with the Lexus brand. Not less successful Lexus feels in Krasnoyarsk. And that's apart from the fact that now Lexus RX is the most popular model of the premium segment in Siberia. The brand is also going to strengthen its positions in the region and to run dealerships in various cities of Siberia in the coming years. In particular, full-featured Lexus showrooms in Novosibirsk and Barnaul will be opened this year.

Land Rover with the increment of 97% closes the top 5. Irkutsk and Krasnoyarsk were “the engine” of the brand sales. Despite the poor range, Land Rover has managed to overtake the sales of BMW and Audi, in East Siberia, and it became the precedent for the whole country. Co-founder of SC "Pervaya avtokolonna” (official dealer of Land Rover, Mercedes-Benz, Volvo, Ford, Mazda, KIA, Chevrolet, Porsche in Irkutsk) Peter Hamsters doesn’t release the specific causes of these unique results. "There are no special factors - all the dealers are working in the one environment. Specifically in Irkutsk there are no special consumers, prices, etc. The deal is not how much we sell in absolute terms, but the fact that we are ahead of the competitors "- he explains.

Finally, Volvo, Cadillac, Porsche, Jaguar and Mini are closing the rating. At the same time Cadillac and Jaguar brands managed to grow more than twice. More "mass" Swedish Volvo, on the contrary, showed only 28% growth rate which doesn’t allow it to expect to be a dangerous opponent for the big German "three" or Lexus. In conclusion it’s worth to rejoice that five super cars Porsche 911, only 12 Porsche Panamera "coupe-liftbacks», the lion's share of which was implemented by Novosibirsk brand dealer, were sold in Siberia in the first half of the year. Also at once 10 customers in Siberia changed their cars to Jaguar XJ.

DIRECT SPEECH
Sergei Kesler, Deputy of General Sales Director of "Avtomir-Novosibirsk" Ltd.
- How do you estimate the results of the first half of the year for your company? Are you satisfied with the results?
- Yes, we are satisfied with the results of the first half of 2012. It passed quite stable, with no excesses. There had been no dangerous surges in demand at the market, we stuck to the planned schedule. Growth rates of the car market met our expectations, and we successfully sold the planned number of cars and realized the plans.
- What kind of results do you plan to finish the year 2012 with?
- In the second half of the year it can be predicted either a future market growth, or falling, which may be due to rumors of the upcoming crisis. Taking into account the realities of Russia, we can expect it in August, so now everyone is waiting with a sinking heart. In turn, an increase in the growth rate may be due to the increase of cars imports. U.S. car market now “is shaking”, so we can expect that this will find a response to the Russian market and increase the supply of cars to the local market. For the time being we expect to achieve the same results of car market that characterized the first half by the end of the year.
- How flexible are range quotas of the region? Have they met your expectations?
- If we talk about quotas, they corresponded to the level of the market, and distributors have met all our requests on the number of cars. We don’t have the situation of severe shortage of some specific models. We have in stock even the same Solaris. The supply of this model met the demand. In this case, despite the fact that Solaris forms a large part of Hyundai sales, other models are also gradually catching up.
- Hyundai previously took 1st place in Novosibirsk sales of cars, but now it’s again pushed by Toyota. In your opinion, will it last for a long time or Hyundai will regain leadership?
- Hyundai, in my opinion, has a good chance to regain first place at the Novosibirsk market of cars, surpassing Toyota. After all, last year the Korean brand succeeded in it. Although, of course, some differences in demand are inevitable, but they are, as they say, are not pathological.
- KIA Company will open the third salon in Novosibirsk this year. Will it lead to the outflow of Hyundai customers or you don’t interfere with each other?
- Strengthening of KIA doesn’t interfere Hyundai, and an outflow in this regard, we don’t observe. On the contrary, the growing popularity of KIA is beneficial for us because it’s a kin Korean brand.
- During the crisis Suzuki brand has demonstrated a very high level of sales. It even managed to enter the Top-5 of foreign brands in Novosibirsk. Now, however, its position isn’t so strong. How do you assess the current situation with Suzuki? Whether Grand Vitara and SX4 are still selling the brand?
- Suzuki sales volume is at the same level as Hyundai. Cars demonstrate strong demand, herewith t majority falls on the Suzuki Grand Vitara and SX4.

Translation by: Monoton Translation Agency.