Russia’s Derways to Add Lifan X60 Assembly

VIENNA – Avtomobilnaya Kompaniya Derways, the Russian assembler of Chinese cars based in Cherkessk, plans to launch assembly of the Lifan X60 cross/utility model this fall.

Derways already assembles the Lifan Smily, Breez and Solano cars from complete-knocked-down kits, known as Lifan 320, 520 and 620 outside of Russia.

With 9,369 cars sold this year through June, Lifan is the best-selling Chinese brand in Russia.

However, the Russian assembler in part has changed its business model. While Derways has handled sales of the Lifan brand in the past, distribution activities have been taken over by Russian sales company, Lifan Motors Rus, which signed a 5-year contract with the Chinese auto maker earlier this year.

“Derways is still responsible for the import of the assembly kits, customs clearance, the assembly, the certification and other activities,” Alexander Romanov, Derways vice president-development, tells WardsAuto.

Derways began assembling the Haima3 sedans and hatchbacks in November 2010, but volumes did not meet expectations, in part because of high prices. Haima output was halted at the beginning of this year.

However, Derways expects to restart Haima assembly this fall. As in the case of Lifan, the company will act only as an assembler.

“That means that Derways is still selling the remaining Haima3 inventory, but a Haima subsidiary will be responsible for sales in the future,” Romanov says.

With the restart of Haima output, Derways will switch to the new Haima Family, a significantly restyled version of the old Haima3.

The original planning for cooperation between Derways and Haima called for assembling the smaller Haima2 as well. That vehicle was never launched, but Romanov says Haima2 assembly still is planned.

Derways’ portfolio also includes Geely cars assembled for a Russian distributor. In addition to Geely MK sedans and MK Cross hatchbacks, output of the Geely Emgrand sedan and hatchback started in Cherkessk in May.

The auto maker also welds and paints Great Wall Hover H3 SUV bodies, shipped for final assembly to the IMS facility in Gzhel, near Moscow, controlled by Russia’s Great Wall distributor, Irito.

There still are ongoing negotiations with the Taiwanese auto maker Yulon regarding assembly of Luxgen-branded vehicles in Cherkessk.

“We are continuing to work on this project and are planning the certification of Luxgen cars in Russia,” Romanov says. Yulon also plans to set up a Russian distribution company to handle sales.

“But a final decision has not been made,” Romanov says.

In June, Russia’s largest bank Sberbank Rossii and Moscow’s city government signed a letter of intent to establish a contract manufacturer of cars and commercial vehicles. Derways, currently controlled by Sberbank, is to become part of the joint venture called MosAvtoZil.

The impact of Derways’ planned integration into the MosAvtoZil JV remains unclear.

“In the future, it could mean that Derways would assemble other brands in addition to its existing program,” Romanov says.

He confirms Derways, based in the Karachay-Cherkess Republic in southern Russia, is in talks concerning the construction of a new factory in the neighboring Stavropol Region.

Viktor Shurupov, vice premier of the Stavropol Region, tells the RIA Novosti news agency Derways is interested in a location for a plant to produce 50,000-60,000 cars a year. He mentions the city of Nevinnomyssk, about 29 miles (47 km) north of Derways’ current location in Cherkessk, as a possible site for the new facility.

“These plans are not involving relocation of the existing plant in Cherkessk, but rather additional capacity,” Romanov says.