Lada is scaling down its production by nearly half as the Russian motor industry struggles against rampant inflation and a rash of foreign imports.

Lada is scaling down its production by nearly half as the Russian motor industry struggles against rampant inflation and a rash of foreign imports.

According to the BBC, even buyers on a low budget are opting for second-hand European-built models rather than new Ladas. This, the report said, would force the Lada factory in Togliatti, Southern Russia, to scale down its production by 44 percent this year.

Avtovaz, which includes Lada, builds about 750 000 vehicles each year. This includes the Niva 4x4, which is built in conjunction with General Motors and has been on the South African market for a long time. The Lada’s major selling points are the availability of spare parts and ease of servicing.

But components for foreign cars are now more widely available, and Western manufacturers such as Ford, which has just opened a factory outside St Petersburg, are now moving in to build new cars in the region as well.

The Russian motor industry has also been devasted by inflation, says the BBC. A basic Lada saloon could be bought for the equivalent of just R24 000 two years ago, but prices have almost doubled - and the cars have not been updated.

The BBC says that the Russian car makers will have to make drastic improvements to stay in business, as their years without competition in a captive market are over.

Under a new patriotic policy, Russian bureaucrats will have to drive locally-made cars. The Volga, an upmarket car produced since Soviet times, is to make up at least 80 per cent of the government's fleet.

Vladimir Kozhin, the Kremlin's chief property manager, said the plan underlined official support for Russia's car industry. "The car industry here has reached a standard high enough for members of the authorities to use only cars made on Russian soil," he said.

But economic factors have also played a part in the move. A top-of-the-range Volga, a car that has been produced in various forms for over 30 years, costs less than a third of what Russians pay for an entry-level BMW.

In the motoring hierarchy of the Soviet Union, Volga occupied a place well above the Lada but below the Zil, an oversize luxury car loved by Communist Party apparatchiks.

Original article from Car