Renault SA Chief Executive Officer Carlos Ghosn said Russia will surpass Germany to become Europe’s biggest car market within two years as economic growth stokes an unprecedented consumer boom.The Russian car market, powered by an economy in its 10th consecutive year of growth, had sales of more than 2.3 million vehicles last year, compared with 3.15 million in Germany. As demand increases, Renault, Ford Motor Co., General Motors Corp., Toyota Motor Corp. and Volkswagen AG have started production in Russia or are building plants.

“In the next two years, Russia will become the largest car market in Europe,” Ghosn said at a conference in Moscow today organized by investment bank Troika Dialog. “Russians love cars and it shows in statistics.”

Russians spent a record $53.4 billion on cars last year, 67 percent more than in 2006, PricewaterhouseCoopers LLP said this month. The number of new cars sold may rise 13 percent this year, Oskar Akhmedov, head of the Association of European Businesses in Russia’s automotive committee, said on Jan. 16.

Russians bought more than 1.6 million foreign-brand cars last year, 61 percent more than a year earlier. Increased sales this year will come mainly from foreign brands, Jacek Gorsky, general director of Detroit-based GM’s Commonwealth of Independent States division, said this month.

The best-selling foreign car in Russia last year was the Ford Focus, followed by the Renault Logan, Chevrolet Lanos, Hyundai Accent and Daweoo Nexia.

Scope for Expansion

The Russian car industry has further scope for expansion because the penetration rate of 200 vehicles per 1,000 people is lower than in most European countries, according to Akhmedov, who also runs Volkswagen’s local unit.

Growth will be led by regions outside the Moscow and St. Petersburg metropolitan areas, Akhmedov said.

Renault, which established a venture with the Moscow city government in 1998, agreed last month to buy 25 percent of Russia’s largest carmaker, OAO AvtoVAZ, to make Logan models together. The first priority will be to promote AvtoVAZ’s Lada brand to make it “strong and attractive,” Ghosn said.

AvtoVAZ said this month 2007 sales advanced 6.2 percent to a record 663,500 vehicles. Renault has no plans to acquire a controlling stake in AvtoVAZ, Ghosn said.

GM expects to sell more than 300,000 cars in Russia this year, or 16 percent more than last year, including 130,000 locally made vehicles, Gorsky said at the Jan. 16 conference in Moscow. GM Chief Executive Officer Rick Wagoner said in a Jan. 4 interview the company has “very aggressive” growth plans this year, which would include Russia.

Ford, which makes 75,000 Focuses a year near St. Petersburg, plans to sell 200,000 cars in Russia in 2008, Irina Sharovatova, the company’s marketing director for the country, said at this month’s Moscow conference.

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