Renault Predicts Long-Term Advantage in Russia

CEO Carlos Ghosn expects the Renault-Nissan alliance to gain an advantage over rivals in Russia because the company sources more parts locally, the Financial Times reports.

All carmakers have been struggling in Russia, where demand for new cars has dropped 12% so far this year, including a 26% decline in August. LMC Automotive predicts the market will shrink 16% by year end.

But Russia's weak ruble is especially tough on companies that import much of the content for their locally produced vehicles, Ghosn points out. He says 75% of the components for the Logan sedans and Sandero hatchbacks Renault makes locally through its OAO AvotVAZ Lada-making affiliate are sourced locally compared with about 60% for Volkswagen models built in the country.

"Those that are more localized can hold the line much better than those who are importing," Ghosn says.

Renault acquired 25% of AvtoVAZ in 2008 and with Nissan took control of the company earlier this year.