VIENNA — Russia's auto industry is a conundrum for domestic automakers. On one hand, the economy and some car plants are confronted with serious problems. On the other, industry leaders AO AvtoVAZ and OAO GAZ could sell more vehicles than they are able to produce.

The country's largest automaker, AvtoVAZ, is working extra days to meet the high demand. “We decided to work on all Saturdays, except summer months, next year,” says AvtoVAZ Chairman Vladimir Kadannikov.

The maker of the Lada remains the largest carmaker in Eastern Europe. The company produced 344,385 cars during the first half of the year, 4.8% more than during the same time 1999.

Another 16,521 Ladas were assembled at the subsidary AO RossLada assembly plant in Syzran. AO SeAZ, a division of AvtoVAZ, built 7,845 minicars during the year's first half. AvtoVAZ also is increasing export shipments, which had been down in recent years.

“We will export about 100,000 cars this year,” says Kadannikov. “(But) we are not able to satisfy the export demand this year. I think that we will plan more cars for export for the next year.”

Additionally, Lada cars are assembled in the Ukraine and in Ecuador. Further satellite operations are planned. “We have negotiations about the assembly in north Kazakhstan, in Ust-Kamenogorsk,” says Kadannikov. He also confirms negotiations over Lada assembly in Iran.

GAZ, which produced 63,948 Volga cars in the first six months of 2000, also is in the position of having higher demand than capacity. Despite this, the company faces delay of its new Volga 3111 car.

Industry critics say a major flaw of Russian makers is the long periods between the presentation of a prototype and the actual production start. The GAZ 2308 Ataman, for example, was unveiled in 1995 and finally is scheduled for production this month.

In the case of the Volga 3111, the official start for production of the new model, which was first shown as a prototype in 1998, was celebrated in late December 1999. Yet only a few units have been built. Volume production is expected to ramp up at the end of the year, when the installation of assembly equipment is finished.

GAZ plans two volume stages for its new Volga 3111 — the first will be production of 10,000 units a year, which could be reached in 2001, and the second one with 100,000 cars. Sources in Nizhny Novgorod, however, say the second stage could be postponed.

GAZ, instead, may decide for an earlier production start of its new Valday light commercial vehicle, which is larger than the Gazel and Sobol model families. GAZ also may venture back into sport/utility vehicle (SUV) production. The company's GAZ 2169 Kombat drew attention at this year's Moscow auto show.

A throwback in looks and appeal to the famous GAZ 69 4-wheel-drive vehicle of the 1950s, the vehicle marks GAZ's comeback as an SUV maker. The first 4wd to be produced will be the GAZ 2308 Ataman pickup truck this month.

“We are already solving questions connected with the export of the pickup to South American countries,” says GAZ President Nikolay Pugin. The GAZ 3106 Ataman II, which is based on the same chassis, may be GAZ's main SUV in the future. The vehicle takes styling cues from the Volga 3111. “I think that we will start the production of the GAZ 3106 Ataman II in 2003,” Pugin says.

AOOT Ulyanovsky Avtomobilny Zavod (UAZ), manufacturer of SUVs and 4wd vans, may face serious competition due to GAZ's return to off-road vehicles.

The company is expected to fight back with new versions of its 3160 series, including the 4-door compact pickup truck UAZ 2362, which may go into production late next year. The company also will build a new van series, the 3165, in 2002. The vehicle will compete with GAZ's Gazel and Sobol models.

UAZ, meanwhile, has high hopes for a West European presence through its cooperation with Italy's de Tomaso Modena SpA Automobili. “We dream to sell about 20,000 vehicles a year in five years through this company,” says UAZ's general manager Pavel Lezhankin.

Today, both OAO Izhmash Avto and AO Moskvich produce only a fraction of what they once did. The management control of Izhmash Avto was taken over by SOK Holding some months ago and there already are signs of improvement. But the situation at Moskvich remains dire. Only 4,123 cars were produced between January and June, down 77.1% from first half of 1999.

Russian car industry officials appear to be bewildered by the management methods of Ruben Asatrayan, Moskvich's general manager. The company is in serious trouble yet absurd models are being presented, such as the ugly Duet coupe or the Ivan Kalita stretched sedan.

Likewise, small automaker OAO ZMA, a subsidiary of truckmaker KamAZ, is having problems.

The automaker produced 16,081 Oka mini cars in the first half of 2000 but could have produced and sold more cars if the number of available engines was not the limited.

AvtoVAZ, manufacturer of the 0.75L 2-cyl. engine in the Oka, claims it cannot increase engine production.

The company has tested several other alternative engines but most have proven too costly. The Oka, which costs about US$1,800, is Russia's cheapest car. An expensive engine would increase the price too much.

Like much of the global auto industry, there are signs of consolidation in Russia. SOK Holding, which runs the RossLada assembly plant, has management control at Izhmash and shares in five big suppliers, may be looking for more.

Russia's metal industry is showing signs of becoming interested in the vehicle industry, as well. Sibirsky Aluminyi, the Russian aluminum giant, for example, has become majority shareholder of OAO Pavlovsky Avtobus, the biggest Russian bus maker.

Severstal, Russia's largest steel producer, has gained control of UAZ. The company would not disclose the size of its holding, but it is believed to have aquired a 20% stake.