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Bo Andersson: Engineering Change at AVTOVAZ

April 16 – Togliatti, Russia – Bo Andersson became president of Russian carmaker AVTOVAZ earlier this year, the first foreign chief of the nation’s No.1, and a sign of Renault-Nissan Alliance’s ambitious plans for the market as a sales and production hub.

AVTOVAZ, majority-owned by the Renault-Nissan Alliance, is a cornerstone of Chairman Carlos Ghosn’s plans to expand sales to new markets as well as yoke existing capacity and market presence.

Andersson, with 25 years in the automotive industry, told the Global Media Center earlier this month that his AVTOVAZ agenda begins with returning the Russian giant to profitability, restoring market share to 20%, and ultimately making 6% operating margin.

Global Media Center:

You’ve been at AVTOVAZ for three months but have a long history in the auto industry. What is your agenda for Russia’s largest automaker?

AVTOVAZ President Bo Andersson:

I’ve been in the automotive industry roughly 25 years, I’ve been in Russia for five years, and I spent 20 years at General Motors. I’m fascinated with Russia because we have very good people, very good workers.

If you look at my role at AVTOVAZ, it’s simple: First, return to profitability; second, return to 20% market share in Russia; third, generate positive free cash flow; and then, make 6% operating margin over time.

Media Center:

How important is the Alliance to AVTOVAZ?

AVTOVAZ President Bo Andersson:

First, if you look at the Russian market, it’s growing very fast and is likely in a few years to be the largest in Europe.

Today, for the Alliance, we have 15 million LADAs on the streets of Russia with Russian customers. We have roughly 1.5 million Nissans, and roughly 1 million Renaults, so we are the major factor in Russia. It’s a responsibility, but also an opportunity.

Media Center:

Describe the Russian market now.

AVTOVAZ President Bo Andersson:

First, it’s an extremely demanding market. Secondly, what I see is Russian consumers are always looking for something new that is interesting and hot, and what I see is a great opportunity for Datsun.

We are building the Nissan Almera, and we have seen two very good months of sales in January and February, and we are proud as AVTOVAZ that this is a product we produce. So, tough market, for the Alliance we are the major player here, that brings a lot of responsibility, but it also brings opportunity.

Media Center:

How are ties with the Alliance a “Win-Win” for all partners?

AVTOVAZ President Bo Andersson:

When I look at AVTOVAZ, we are an institution. It’s a great Russian company, unfortunately my view was for the last couple of years we have had bad habits. So, to tell our workers that we have the opportunity to build world-class Nissan products, world-class Renault products, world-class Datsun products, is first a big responsibility.

Secondly, it means we must have world-class quality. And third, this also helps us to improve our own production processes, our own production quality that we use for our LADA products. So, I would say it’s difficult, but if we do everything right, yes, it’s a ‘Win-Win’.

Media Center:

We’re speaking in what is known as “Motor City” Russia. What models will be rolling off the Togliatti line now and in years ahead?

AVTOVAZ President Bo Andersson:

Last week we had a very good production week, the first week in many months that we produced 2,200 vehicles. Out of these 2,200 vehicles, the majority are LADAs, including our best-selling LADA Granta. We’ve re-launched the LADA Karina, and last week we were building roughly 330 LADA Largus coming to us based on the Alliance. Then, we built 262 Nissan Almeras, and now are on the ramp up for Renault Logan, and last week we built 100 Logans a day.

So, a lot of responsibility, but it makes the team proud. It is also tough, because the quality level that we need to have on all of these products is something we’re not used to.

Media Center:

What is the outlook for two to five years ahead?

AVTOVAZ President Bo Andersson:

It’s hard to say, but we have a lot of orders from the Alliance. We’re to produce more Renaults, more Nissans and more Datsuns, and that’s the first level. Secondly, with our target to gain 20% market share, that means we need to build and sell 500,000-700,000 vehicles every year under the LADA brand, and I think it’s possible, not easy, but possible.

If you look at these challenges, it is to have the right products for the Russian market.

What is a LADA?A LADA is a vehicle designed for rough and tough conditions, high road clearance, and secondly, Russian customers expect to repair the vehicles themselves; they must be easy to repair – and with affordable spare parts. This is what we are designing next-generation LADAs for, and that also gives us a good export opportunity in emerging markets.

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