Volkswagen attempts to crack a frigid market

Volkswagen premiered a car designed specifically for the Russian market in Moscow on June 2.

The new Polo Saloon is the first time Volkswagen has engineered a car specifically for the Russian climate and street conditions and marks a new attempt by Volkswagen to break into an ailing market dominated by domestic brands.

The Polo Saloon is produced in Kaluga, in Russia, and has been extensively tested in different climates, with variable street conditions and fuel qualities.

Volkswagen says that like locally produced vehicles, the model has been equipped with an engine suited to Russian operating conditions; a galvanized, non-corrosive body and a wheel suspension geared to bad roads; particularly robust paints; and chrome parts that are highly resistant to aggressive agents.

The Polo will be sold for just over €10,000 with a new 1.6-litre engine producing 77kW, and 5-gear manual gearbox or 6-gear automatic gearbox.

However, Volkswagen faces an uphill struggle in Russia, where domestic brands are king, and Lada accounted for one in every four cars sold during the first three months of 2010.

The recession has hit Russian car buyers hard, with the market now a shadow of itself in 2008, when many predicted it would be the largest in Europe.

In 2009, the market shrank by half and according to automotive analyst JATO Dynamics, Q1 2010 sales fell 26.6 percent from an already dismal level in Q1 2009.

In March 2010 a further scrappage incentive of 50,000 RUR (€1,125) per vehicle was introduced and the market subsequently posted its first year-on-year gain in 18 months in April - although 80 percent of that was estimated to have gone to Lada.

JATO's Regional General Manager Evangelos Hadjistavrou said in April that a lack of affordable credit was "effectively blocking purchase of all but locally-built cars, which carry their own tax breaks."

Volkswagen sold only 8,641 cars in Russia during the first three months of the year, compared to 71,632 for Lada.

http://www.volkswagen.com

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