AvtoVAZ discusses localization in Russia under its own Dongfeng car brand

As it became known to Kommersant, AvtoVAZ is discussing localization in Russia under its own brand of Dongfeng cars, negotiations are underway with other Chinese manufacturers. But the dialogue is being delayed due to the higher requirements of AvtoVAZ than those of other Russian manufacturers. In particular, Lada claims the rights to the newest Chinese models, and also wants to ensure a high level of localization, which requires integration into the supply of components from China.

Two sources of Kommersant said that in order to load one of its free sites, AvtoVAZ is discussing the localization of Dongfeng cars under the Lada brand. Telegram channel “Autoflow” wrote that we are talking about the Lada Izhevsk plant, and production will begin before the end of the year.

Prior to the crisis, AvtoVAZ produced Lada Vesta cars on the site, but decided postpone production in Togliatti. In Izhevsk, it was supposed to produce an electric version of Lada Largus – a car on the platform of the former AvtoVAZ shareholder Renault B0, the production of which has not yet been resumed.

One of Kommersant’s sources, close to the parties, confirms that negotiations are underway and the Chinese concern is really ready to provide models for production under a different brand in the Russian Federation. Another interlocutor of Kommersant, who is familiar with the situation, added that AvtoVAZ is also negotiating with other players from China.

Unlike other car assembly projects in the Russian Federation, AvtoVAZ wants to get the rights to the latest models in the line of the future partner, as well as to ensure a fairly high localization.

The latter, clarifies the interlocutor of Kommersant, suggests that the partner should provide for an increase in the production of components in China for release in the Russian Federation.

AvtoVAZ did not comment on the negotiations with Dongfeng, stressing that they had already reported on negotiations with “several eastern partners for several sites.” “We do not disclose any details, including due to non-disclosure agreements with our potential partners,” they added. The head of Dongfeng Motor Rus, Wang Peng, did not comment on the negotiations.

In June AvtoVAZ already began production of FAW cars under the Lada brand on the basis of the former Nissan plant in St. Petersburg. First became model Lada X-Cross 5, which is a FAW Bestune T77. Now the car is produced even with the FAW nameplate on the steering wheel, which AvtoVAZ explained by the fact that “the brand image on the airbag is a certifying sign of the car and requires a very long process of additional certification.”

Drome wrote that the assembly of Dongfeng planned to start and “Avtotor”. Kommersant’s source says that these negotiations were conducted with the parent concern in China without the participation of the Russian office of Dongfeng. In December 2022, a company associated with Sergey Shcherbakov, the son of Avtotor founder Vladimir Shcherbakov, created several legal entities-distributors for brands that Avtotor has already begun to produce. Among them was LLC “Vostok Wind Rus” – the translation of the name Dongfeng.

In addition, on July 11, it was announced that Motorinvest, which produces Dongfeng electric cars under the Evolute brand, has also become a distributor of the brand.

Another Kommersant source emphasizes that the level of AvtoVAZ’s requirements for partners in terms of localization and novelty of the model range is much higher than that of other manufacturers in the Russian Federation.

Sergey Udalov from Avtostat notes that any manufacturers, on the one hand, are interested in the supply of finished cars, on the other hand, they strive to increase sales. He clarifies that there are no difficulties in the supply of car kits, since this level of assembly does not require adjustments to production plans in China, but the supply of individual components is a more complicated and long story.

According to the expert, it is required to certify suppliers, conduct tests, and re-book the capacity of component production in China. “It is more complicated, longer and involves processes within China. At the same time, with our own suppliers, there should be guarantees of volumes, which are unlikely to be given by anyone here,” concludes Mr. Udalov. In addition, he doubts that AvtoVAZ is ready to prepay for deliveries – the Russian company “probably would like the Chinese partners to take these risks.”

Olga Nikitina