In the car world, the BRIC countries have already got their institutional market leaders. That’s how quick these markets are moving. General Motors and Volkswagen have an iron grip on the Chinese market, Suzuki and Hyundai have India in their palms. Fiat is king in Brazil. But Russia is still anybody’s game. Well, Renault and Nissan want to change that.
Bloomberg reports that Renault-Nissan is closing in on taking a majority stake holding in Russia’s AvtoVAZ. The tipping point for going after AvtoVAZ was when Prime Minister Vladimir Putin gave his blessing to the deal.
Is this a gamble which will pay off? The one thing I see working against it is the return on investment. Of the BRIC countries, China’s car market was 13.5 million annually last year. This year, it might be 17m, India is currently at 1.5 million, but with nearly 1.2 billion customers, that figure has the potential to reach China levels. Brazil’s market is currently at 3.2 million and still growing. Russia’s car market? Russia sold less than 1.5m cars last year, but Bloomberg estimates that Russia could reach sales of 4 million. By 2015. Not to mention the rampant corruption which is making running operations in Russia troublesome. Of the BRIC countries, Brazil is 69th on the Corruption Index, China is 78th and India is 87th. Where’s Russia? They’re 154th. 20 places below Zimbabwe. Bonne chance, Carlos. You’re going to need it.