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A tale of two car companies


In provincial Russia only two makes of car are seen much. The Zhiguli (better known in the west as the Lada) has about 60% market share catering to the mass market and is produced by the Soviet-era dinosaur AvtoVAZ. The other one is the Volga. Made by GAZ, it is aimed slightly upmarket where it holds a 20% market share.

Both companies are trying to transform themselves but GAZ has new young management that promises to go faster. Oleg Deripaska, one of Russia's so-called oligarchs and head of Siberian Aluminium, took control in the summer after hoovering up stock on the open market. Backed by a huge cash pile, SibAl, as Deripaska's company is known in Russia, is theoretically what the big Soviet-era companies need: an active owner with money to invest who is motivated by profits rather than production levels.

The trouble is that it seems that the old dogs at AvtoVAZ have learnt new tricks and their company is doing better than GAZ. The advantage AvtoVAZ's chairman Vladimir Kadannikov has is experience: he was making cars when Deripaska was a boy.


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