MOSCOW (Reuters) -- Luxury cars to indulge the rich were the stars as the Moscow auto show opened last week, but it is the normal Russian citizen that the world's carmakers are targeting, as they hope to profit from one of Europe's few growing markets.
Volkswagen forecasts 30 percent sales growth in Russia this year and has announced 1 billion euros ($1.3 billion) in new investments before 2018. General Motors will also spend $1 billion over the next five years to ramp up output in Russia, while Renault sees Russia challenging Brazil to become its No. 2 market.
"The situation is very different from Europe and the United States, because you have a lot of people that have very old cars -- or no car -– [who] are entering the market for new cars," Renault's regional head Bruno Ancelin told Reuters. "It is a tank of potential customers that is still full and we have years and years in front of us to address this kind of customer."
Organizers are expecting more than 1 million people to visit the annual show at an exhibition center on Moscow's traffic clogged orbital motorway. The show opened to the public on Friday. The event features 24 world premieres of new models, the first showing in Europe of 21 models and 86 Russian roll-outs.
Sports car fans will get a chance to view a Maserati GranCabrio Sport, with a top speed of 285 km/h and a local sticker price of 210,000 euros ($264,000) in the Russian market. More than 40 Maseratis have been sold in Russia so far this year, a representative said.
Everyday vehicles of interest
But while Russia remains a tempting market for manufacturers of machines for conspicuous indulgence, depressed automotive sales in western Europe and the steady, oil-fueled growth of the Russian economy have made the continent's second-biggest car market an object of interest for those offering more everyday vehicles.
These range from the sub-$10,000 compacts which Renault and Nissan are pushing out under the rejuvenated Soviet-era Lada brand of their Russian unit AvtoVaz, to well-appointed mid-range sedans and passenger vans aimed at the growing middle class.
Fiat, under its own mass-market badge, is looking to the modern, affluent family to pitch its new seven-seater Freemont, on display in Moscow.
"It's a dynamic market and one of the few showing growth," said John Stech, who is head of Fiat's Chrysler unit in Russia and manages sales and distribution of Fiat, Jeep and Chrysler. "There's great potential as incomes develop."
An array of vehicles "fully loaded" with optional extras delivering comfort and convenience, like satellite navigation, seems to overshadow examples of the over-powered status symbols that were once the trademark of Russia auto displays.
Said Chrysler's Stech: "There are many stereotypes of the Russian market: "At one point it was a macho vehicle market -- less so now. ''We have customers who appreciate value but are not looking at showing off - they are more modest."
New-car sales in Russia grew by 40 percent last year in volume terms to over 2.6 million vehicles, recovering most of the ground lost after they halved in the slump of 2009. In money terms, sales grew by 70 percent last year to nearly $60 billion, estimates consultancy PricewaterhouseCoopers, buoyed by a state-backed scrappage scheme - now phased out - that encouraged drivers to dump their aging Ladas and buy new models.
Sales of foreign brands made in Russia topped one million for the first time in 2011, reflecting President Vladimir Putin's drive to diversify the industrial base of the world's ninth-largest economy away from oil and gas. Growth has slowed this year to 14 percent, but the industry will continue to enjoy support from government incentives to localize production put in before Russia joined the World Trade Organization this month. Stiff import taxes had pushed several big foreign manufacturers to set up production inside Russia.
Although Putin is typically chauffeured around in a bulletproof Mercedes, his industrial policy has sought to promote the development of a domestic auto industry in Russia, a country of 140 million people. Foreign carmakers, while officially welcome, have faced the difficult choice between partnering with struggling local manufacturers like state-controlled AvtoVAZ, or building their own factories from scratch.