AVTOVAZ will increase prices from the 26th of January 2009

The AVTOVAZ management taking into consideration the interests of buyers has made the decision to change the terms of the price increase for Lada cars for the 26th of January 2009. It was informed earlier that at first AVTOVAZ planned to increase prices 2-3 percent for its model line since the 1st of January.
According to the director of the analytical agency "AUTOSTAT" Sergey Tselikov, nowadays the AVTOVAZ� production cost is growing significantly faster than the proceeds. But the profitability is decreasing. For the first 9 months of this year the sales profitability fell 7.3 percent whereas the year before it was at the level of 13-15 percent. A little more - and the plant will work with negative profitability. The reason is the price increase for materials and components, tariffs, and other expenses including administrative ones. It is extremely difficult to reduce constant expenses for such enterprise as AVTOVAZ. There is only one way out - to raise prices. Moreover, inflation is going up and the prices for AVTOVAZ production are growing more slowly.
So, the last time when AVTOVAZ changed transfer prices for its model line was at the beginning of June 2008. Thus, the inflation for 9 months of 2008 constituted 10.6 percent and transfer prices of Lada cars grew 4.3 percent.