Why AvtoVAZ raised prices from January 1, 2018
AvtoVAZ Concern confidently occupies a leading position among the manufacturers of vehicles purchased by Russian citizens in 2017. Independent polls showed that 64% of Russians intending to buy a car are going to buy a product released by the domestic auto industry. Therefore, the news of price increases, announced by AvtoVAZ in the second half of 2017, was a shock for many drivers.
First of all, the rise in price will affect retail customers and it will spread to almost the entire model range. But experts say that everything possible was done to ensure that this increase took the minimum scale, slightly affecting the cost of cars.
The increase in prices for manufactured vehicles at the very beginning of the year is a standard situation, therefore, this is happening from year to year. Most of the reasons are caused by new changes, innovations in taxation or other pricing factors.
The growth of the dollar
Standard causes include a fall in the ruble exchange rate against the dollar. Since some of the elements necessary for assembly are acquired outside the country, the starting costs are steadily rising.
The same applies to the instrument base of the manufacturer, which is subject to a partial update, which takes place annually. For 2018, AvtoVAZ prepared approved plans to “rejuvenate” production capacities, which will help improve the quality of products in the future.
Rising energy costs
Another reason was the steady increase in energy production costs, which includes not only the payment of consumed electricity or petroleum products, but also the salary of employees. This factor cannot be discounted, since it directly affects the price and competitiveness of the goods.
Increase utilization collection
The collection for recycling is currently distributed between two parties: importers and domestic producers. The government decided to increase this indicator, since this measure will allow an additional inflow of funds to the state budget.Of course, the increase in utilization fee could not affect the cost of the car.
In accordance with the approved plan of the Ministry of Finance, indexation of the collection amount by 15% will ensure the inflow into the budget of 28 billion rubles only during 2018. Based on statistics on the growth in sales of goods of the domestic auto industry, in 2019 an additional 224 billion rubles will be received, and in 2020 - 268 billion rubles.
Despite the fact that the increase in the utilization fee is a very large percentage, it did not significantly affect the price of cars produced in Russia. This picture is observed due to the support of the state, which is expressed in the form of subsidies for the payment of utilization fee for domestic machine builders. But exported cars from January 1 may significantly increase in price due to the influence of this factor. True, experts urge to consider this in a positive light, because this moment can significantly increase the consumption of products of the domestic auto industry.
The collection for recycling is directly related to the engine capacity, so for smaller cars this increase will be less noticeable than for more powerful off-road vehicles.
The standards for equipping cars produced by AvtoVAZ will improve, and this directly affects the pricing. In addition to the main parameters responsible for the safety of the driver and passengers (such as airbags and the reinforcement of modern mounts for installing child seats), the concern’s management was concerned about the exhaust system, which is closer in its standards to European toxicity requirements, which will ensure the smooth operation of Russian cars abroad.
According to experts and leading experts of AvtoVAZ, all such measures to increase comfort and safety lead to the recognition and strengthening of the prestige of domestic products not only within the country, but also abroad.
How much the cost will rise
The size of the price increase for each model is already known. On average, prices will grow by 2.5%, but for individual AvtoVAZ vehicles and various configurations, this figure may slightly change:
- Lada Vesta rises in price by 15 thousand (569.9 thousand), the Prestige / Luxe grade increases in price by 19 thousand;
- Lada Granta and Lada Kalina - the cost increases by 10 thousand, which is 2.6% (399.9 thousand);
- Lada Priora and Lada Largus added to the previous value of 15 thousand each;
- Lada SUVs 4x4 three-and five-door performance are now at 8 thousand more;
- Lada Bronto and Lada Urban rose by 16 and 14 thousand, respectively;
- XRay Crossover adds to the price of 15 thousand - this is equal to 2.5% (614.9 thousand).
AvtoVAZ specialists are confident that such a change in value will not reduce sales in 2018 and will not remove the concern from the list of priority manufacturers for the Russian consumer. This is easily seen by comparing the rise in prices of domestic and foreign auto. In percentage terms, the increase in prices for imported cars for our consumers will be from 2.1% for Korean-made cars, to 13 - 17% for European and American models.
It is important to remember about promotional offers, which imply a significant reduction in cost. Such offers and promotions are, as a rule, carried out more often by AvtoVAZ than by foreign representatives of the automotive market, which gives buyers the chance to save a significant amount.
The concern’s management does not fear a decline in sales due to the increase in value, also because the government has in recent years been widely supporting and popularizing the domestic auto industry among the population of the Russian Federation,that brings its results, expressed in the growth of the number of cars sold in recent years and a stable positive trend in the automotive industry.
As statistics show, AvtoVAZ products may become more expensive once or twice a year. In the case of a re-price increase, this is observed at the beginning of the second half of the year. So far, there are no official forecasts and information about this.