AvtoVAZ, Sollers sign agreement on competitive auto-part supply

Russian carmakers AvtoVAZ and Sollers have signed a joint agreement on the development of auto-component suppliers aimed at creating competition and personnel development.

AvtoVAZ president Igor Komarov and Sollers general director Vadim Shvetsov signed the agreement, which is also aimed at promoting business efficiency and developing programs that will boost professional standards and training programs for workers. Both companies are hoping that the agreement will allow suppliers to be developed that can supply and meet the needs of both companies.

Yuliy Matevosov, an auto analyst at Aton, praises the decision but warns that the effect, although positive, will not be felt immediately.

“Generally speaking, it was the right decision, which has certain advantages for both sides. But it won’t give economic effect any time soon. I suppose it’ll take about 3 to 5 years for the decision to bear fruit. Furthermore, Avtovaz had long complained for a high monopolization in the market of auto components, with suppliers inflating the prices. Now the cooperation will help to increase the quality of the components and cut its price.”

Matevosov said that the resulting uniformity in product supply will attract interest from other companies.

“Better quality at a lower price is a certain advantage for the parties. Moreover, a single unified platform for car components production will help to expand its business and attract other carmakers.”

Aleksey Serezhenkin, deputy CEO at the Association of Russian Automakers shares a similar view and long term outlook.

“Any cooperation is good, I think, but this one will take time show clear effect. The first and the foremost advantage here is bigger production volumes, which will improve the companies’ performance. As simple and straightforward as that.”