The Russians are coming

Russian automaker Avto VAZ Inc., in an unprecedented move, will soon begin assembling small cars in Uruguay and Colombia -- mainly for export to Mercosur and Andean Pact nations. The company will begin early this year by manufacturing 300 units a month in Cali, Colombia, through a joint venture, says Rafael Anssens, sales manager for Motores Internacionales SA in Panama, which has exclusive Lada distribution rights for 24 Latin American and Caribbean countries. AvtoVAZ will produce a similar number of vehicles in Uruguay through a parTnership with local auto distributor Efecto SA. One site being considered is an idle assembly plant in the Nueva Palmira free zone, which previously was utilized by Volkswagen AG. Uruguay is becoming an attractive production base for manufacturers because of its lower tariffs among other Latin trade bloc nations. "We want to be very prudent," says Mr. Anssens. "We don't want to invest too quickly and have financial problems later. We will begin very slowly, only with some models we know will be accepted." One such model is the three-door Samara 1300, which is assembled at the automaker's only facility in Togliatti, Russia. AvtoVAZ produces 700,000 vehicles per year at Togliatti, many of which are exported to Eastern Europe, China, Turkey and the Far East. AvtoVAZ reaps a good amount of business from Latin America -- a total of about $400 million -- where about 50,000 of its cars are sold annually. The Cali factory will supply Ladas to Colombia and four other members of the Andean Pact -- Venezuela, Peru, Ecuador and Bolivia, Mr. Anssens says. Likewise, the plant in Uruguay will supply fellow Mercosur nations Argentina, Brazil and Paraguay.