Lada: The Russian legend of cheap cars is in trouble because of the war

History of the birth of a legend

Lada is owned by AvtoVAZwas founded in 1966 as one of the main Soviet automobile manufacturers at the time.

Lada served as a symbol of Soviet resilience during the Cold War. After the dissolution of the Soviet Union and Russia opened up to trade, the French car manufacturer Renault bought and owned 67.61% shares of the company in 2007.

This is one of the reasons that Lada’s Togliatti factory in Russia had to suspend production. The Togliatti plant, located on the banks of the Volga River, relies on supplies from the Renault plant in Romania.

In other words, more than 20% of the vehicle parts that Lada’s Togliatti plant needs for production come from outside Russia’s borders.

Lada’s factory

In the modern era, international trade will suffer greatly in the event of a war like in Ukraine. Internationally linked economic activities will be affected by the sanctions.

A former AvtoVAZ board member said that getting the company back up and running without support from Renault would take months to years.

Lada’s factory workers will still be paid during the shutdown. However, those working in parts, distribution or customer service roles will continue as usual, as their work is less dependent on international circumstances.

Lada’s shutdown has a significant impact on the Russian auto market, as Lada took a 21% share of car sales in Russia last year. As many other automakers have suspended sales and operations in Russia, there will be fewer new cars at dealerships in the country in the coming months.

Milestones ups and downs

Lada cars were born in 1970 and dominated the Soviet market until the 1980s. Its Niva SUV is still sold today with a starting price of less than $ 10,000.

The first Lada car launched was called Lada ‘2101’, similar in design to the Fiat 124. Lada 2101 caused a fever not only in the domestic market but also in the world market.

Lada 2101 is equipped with drum brakes, ground clearance is increased and parts such as body and suspension are reinforced. This allows the car to adapt to Russian road conditions and temperature changes.

Russian President Putin used to drive the SUV Lada Niva

The cars manufactured by Lada are appreciated for their low cost and ease of repair due to the advantage of being domestic cars.

Russian President Valdimir Putin used a camouflaged Lada Niva (personally owned) to promote Russia’s auto industry.

The Lada Niva has 4-wheel drive, 4-speed gearbox and is popular in foreign markets. 50% of vehicles shipped are exported.

Since 2008, after being owned by Renault, Lada factory has had great financial difficulties, production has been reduced by 2 times.

In the context of the Russian economy facing many difficulties due to embargoes, Lada car company also suffered when sales dropped sharply in the years 2013-2016.

By 2020, Lada will have difficulty catching up with environmental emission standards. The car brand of the AvtoVAZ group was forced to leave the European market.

At that time, the EU began to apply strict standards for CO2 emissions not to exceed 95 g/km for cars. None of the vehicles manufactured by AvtoVAZ meet these new requirements.

As the company explains, due to the small number of sales in Europe, it is not economically feasible to tweak the car to match the new standard.

Anyway, Lada’s main market is still domestic. By brand, in 2020, Lada’s sales decreased by 5.2%, but market share increased by 0.9%, still leading the market.

In 2020, the best-selling model in Russia was the Lada Granta, although sales fell 7.2% to 126,112 vehicles. Followed by Lada Vesta – down 3.7% to 107,281 units, and Kia Rio – down 4.8% to 88,064 units sold.

Just last year, the company just launched the 2021 version of President Putin’s favorite car line Lada Niva.

Nostalgic interior of Lada Niva 2021

Still the “high chassis, airy engine”, the interior and exterior style remains the same since the 80s, but the Lada Niva 2021 has been refined in a detail to suit more modern needs, including the system. New air conditioning system and increased sound insulation.

Lada Niva 2021 owns a naturally aspirated 1.7-liter gasoline engine, producing 82 horsepower and 129 Nm of torque. 5-speed gearbox and 4-wheel drive.

A special feature of Niva is that the starting price in Russia is very soft, just over 700,000 rubles (over 200 million VND).

Intelligent Recovery (according to WSJ, TheDrive)

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