KALUGA — Volkswagen, Europe’s largest carmaker, opened a factory in Russia on Wednesday as it seeks to triple its share of the country’s market over the next three years and joins rivals Ford and Renault in beginning production in one of the fastest growing car markets.
“By 2010, 45 million Russian households will be able to afford an automobile,” chief executive Martin Winterkorn said at the factory’s inauguration in Kaluga, 160 kilometers southwest of Moscow. This country “has huge potential, and we are going to use it.”
Volkswagen, based in Wolfsburg, Germany, plans to increase its share of the Russian market to 10 percent in 2010 from 3 percent currently. The country is an important growth market for automakers as Russians spent a record $16 billion on new foreign cars in the first half as rising incomes fueled demand, according to PricewaterhouseCoopers.
“Local production should help Volkswagen gain more market share, primarily because avoiding the 25 percent import tariff will make it more price competitive,” said Michael Tyndall, an industry analyst with Nomura Securities in London who has a “buy” rating on Volkswagen shares. Volkswagen’s market share in Russia is “too low given its share of the global market.”
Ten-month foreign car sales in Russia surged 64 percent to 1.31 million vehicles. Ford, the world’s third-largest carmaker, is spending $100 million to expand capacity at a St. Petersburg plant by almost 75 percent over the next two years. Renault, France’s second-largest automaker, opened a $250 million Moscow plant in 2005.
