Automobile producers to increase prices

Leading companies of the metal industry, i.e. the Novolipetsky Metal Works, the Magnitogorsk Iron and Steel Works and the Severstal steel works, suggested raising prices for their products, which would inevitably lead to an increase in prices for the end products of Russian automobile makers by 10-12 percent, the press center of the AvtoVAZ car producer reported.

AvtoVAZ is raising prices for its products, too, but holds them within the purchasing capacity of its customers, which is confirmed by the stable sales rate. This year, the most considerable non-recurrent increase in sale prices for VAZ cars did not exceed 3 percent on average over the whole model line.

The pricing program developed by AvtoVAZ, suggests 11 percent in the aggregated growth of sale prices for VAZ cars over 2002. The simultaneous rise in prices for VAZ economy cars by 10-12 percent due to the rise in prices for metal products will thus make AvtoVAZ automobiles inaccessible for the majority of Russian consumers.

The problems with AvtoVAZ sales will inevitably bring about a production cutback followed by a considerable decrease in earnings of regional and federal budgets. The consequences of price escalation will impact the metal industry, too. Car producers will have to break current contract relations with them and start building new ones with foreign suppliers whose products can turn out cheaper.

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