Avtovaz sees annual revenue topping 1 trln rubles by 2030

MOSCOW. Nov 20 (Interfax) - Avtovaz's annual revenue could exceed 1 trillion rubles by 2030 if the group increases production to 700,000 automobiles per year, which it now believes is quite realistic, the leading Russian carmaker's president, Maxim Sokolov told reporters on the sidelines of Transport Week on Wednesday.

Industry and Trade Minister Anton Alikhanov said in the Federation Council on Tuesday that Avtovaz might ramp up production to 700,000 vehicles per year by 2030, or possibly even more depending on the market situation.

Commenting on the plans reported by the minister, Sokolov said Avtovaz Group's plants can produce more than 600,000 automobiles per year at full capacity after their modernization in the past 2.5 years.

"Annual production of 700,000 automobiles is the trajectory in the optimistic scenario envisioned by the Avtovaz strategy approved by the board of directors. Theoretically, if capacity is developed further, we can reach an even higher production volume. But the main thing is for this potential possibility to be balanced with the possibilities of the market and, most importantly, the instruments of industrial policy that would make it possible to fully use it to achieve technological sovereignty," Sokolov said.

If production did reach 700,000 cars by 2030, the group's revenue would exceed 1 trillion rubles, he said.

"Based on the price parameters of this year, which presume an average price of 1.5 million rubles for one automobile, and taking into account forecast indexation in subsequent years, we can cross the threshold of 1 trillion rubles in revenue per year if we produce 700,000 automobiles per year. Given proper fine-tuning of industrial policy, rather than just an optimistic prospect, this could easily be the realistic, baseline scenario," Sokolov said.

Avtovaz did not disclose its revenue for last year. The company's financial statements to Russian Accounting Standards show that, before this, 2021 was a record year when Avtovaz sold more than 350,000 Lada cars and its revenue topped 300 billion rubles.

Sokolov said "certain macroeconomic and market constraints" might prevent Avtovaz from operating at maximum capacity in the near future. He told reporters earlier this week that the Russian auto market is under pressure from high interest rates and changes in exchange rates, and that sales of new cars and light commercial vehicles could fall 18-24% to 1.3 million-1.4 million in 2025 if the Central Bank tightens monetary policy further.

"It's very important in this situation that the government's calibrated industrial policy be directed at fully utilizing all Avtovaz capabilities, including in terms of expanding its model range, new product line. These are new models in the B, B+ and even C class like the Lada Aura, for example. Thus, it's important that not only Avtovaz work as hard as it can, but also our whole team of localized Russian suppliers, of which we have about 1,650, employing more than 500,000 people," Sokolov said.