Comparison of "Toyota" and "Avtovaz" on Russian market

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Automobile firms that want to succeed in the auto industry of Russia must indicate the commitment and should learn that no single business model exists in every country or for every country. There is a need to cater to local conditions and tastes when adapting to existing models. Russian customers are no longer interested in inferior offerings, and big numbers should not carry automakers away.

The Russian car industry is among the fastest growing markets in the world. About 23 million units of cars were sold in Russia in 2013 and the figure is expected to go up by the year 2025. Among the global car manufacturers, Toyota had a 1.9 percent share of this figure. In 2012, private car ownership grew by 12 percent to reach 2.93 million cars bought. This contrasted hugely with European market where sales declined by 8.2 . Most of the world automakers focus their attention on Asia and Eastern Europe due to the saturation and stagnation in the Western markets. Most of these firms have already or are planning to establish manufacturing factories. It is expected that the Russian automobile market will develop dynamically in pace with an increase in real income of its population in the future. This is related to the fact that the country’s quantity of cars compared with other nations is on a low level. Thus, demand for personal transport is still behind satisfaction (
Car importation from foreign manufacturers is having a major influence in the growth of the automobile market in Russia. On the other hand, production of foreign cars within Russia has increased. Moreover, the Russian government participates in the development of the automobile industry through reforms that aim to protect it. During the Soviet Union, AvtoVAZ was the largest automobile manufacturer. Currently, it still holds the same position in the country. It was was established in 1966 and had its first manufactured vehicle in 1970 The collapse if USSR resulted in several issues: risk of bankruptcy, transfer from the planned economy, and privatization policy the mid-1990s, the company had two billion USD debts and, as a result, it got involved in a partial privatization to settle its debts and avoid bankruptcy. AvtoVAZ failed to attract foreign investment due to involvement of various Russian tycoons and the inability of the government to settle part of the debt. In addition, localization also influenced the automobile industry in Russia.

Toyota, one of the largest automobile firms globally in terms of market capitalization was the first company to offer competition to American automakers in the North American market. The firm has numerous factories scattered all over the world that manufacture or assemble cars for local markets. Some of these locations include Japan, United Kingdom, Brazil, China, United States, France, India, Canada, South Africa, and Australia. The company recently strengthened its position in western and central eastern European nations by enhancing operations in its facilities in France, Britain, and Turkey. Its next step is the construction of production facilities in Russia. Total investments in the car industry in Russia are approximately $ 1 billion. Toyota has $250 of that amount with the rest coming from other major component

 

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