(Corrects previous production target to 100,000 vehicles a year, not this year, in paragraph 4)
IZHEVSK, Russia, Sept 25 (Reuters) - Leading Russian automaker Avtovaz began production of its new Lada Vesta model on Friday, a car it hopes will reignite sluggish demand for its vehicles in Russia’s cities.
Avtovaz plans to produce around 5,000 Vestas by the end of the year with sales of the sedan to begin on Nov. 25, President Bo Andersson told journalists at the company’s Izhevsk plant in the Western Urals.
The launch by Avtovaz to reinvigorate sales comes as Russia’s auto market continues to crumble, the victim of an economic crisis fuelled by lower oil prices and Western sanctions over Moscow’s role in the Ukraine crisis.
Sales of Avtovaz’s market-leading Lada brand fell 26 percent year-on-year to 182,000 vehicles in the first eight months of 2015, according to the Association of European Businesses (AEB) lobby group, and the company has rowed back on its earlier target of producing up to 100,000 Vestas a year.
Priced between 465,000 and 600,000 roubles ($7,000 to $9,000), the Lada Vesta will be competing with the Hyundai Solaris and Kia Rio, respectively Russia’s second and third best-selling cars so far this year.
Andersson said 71 percent of the Vesta’s production would be sourced locally and did not rule out testing the new model abroad.
“Firstly we will focus on the Russian market. We should return to the Moscow and Saint Petersburg markets, then we will look at Europe,” he said.
Carmakers in Russia struggle to make a return in foreign markets, constrained by their reliance on costly imported parts which leaves them uncompetitive against rivals manufacturing in Asia and Europe, who source components at home.
$1 = 65.6400 roubles Reporting by Gleb Stolyarov; Writing by Jack Stubbs; Editing by Susan Thomas and David Evans