Moscow News
AvtoVAZ recalls defective cars
AvtoVAZ, Russia’s largest domestic car manufacturer has been forced to recall its new Lada Granta, an entry-level model that is expected to replace the “classic” Lada.
Production of the Lada Granta was launched in late 2011 and AvtoVAZ has high hopes for the car. Although the defect is insignificant, it could negatively affect the company’s plans to build a reputation as a dependable manufacturer, analysts say.
Last Friday, a test drive at an AvtoVAZ dealer revealed that a front end panel on recently delivered Lada Grantas was not sealed well enough to protect a wiring harness. AvtoVAZ said over a thousand cars had been delivered to dealers for sale and it was during pre-sales test drives that the problem was exposed. Several hundred vehicles are to be recalled.
The company plans to fully seal the wiring harness. AvtoVAZ said the procedure was quite easy and the upgraded parts were already on their way to the assembly line. Dealers have been instructed to inspect the cars and to correct the defect. Buyers will have their cars repaired quickly and at no cost. Analysts think this recall campaign could negatively affect AvtoVAZ’s reputation during the model’s initial sales period.
AvtoVAZ officially started assembling Lada Granta cars on November 29, 2011, and nationwide sales commenced on December 22. The car is marketed as an upgrade for the “classic” Model 5 and Model 7 Ladas. After a successful advertising campaign was launched, the base model from the first run was sold on pre-order for 229,000 rubles ($7,316). In all, 20,000 cars were ordered, and 10,000 have been sold. All pre-ordered cars will be delivered to buyers no later than March. Since January 2012, the Lada Granta’s price has been bumped up to 235,000 rubles ($7,507). The new model will be generally available in spring of 2012. In all, the Izhevsk plant can assemble some 150,000 Lada Grantas this year, with mass production slated to start by July.
AvtoVAZ manufactured 561,670 vehicles in 2011, a 3% increase over 2010. However, overall production has been down since May for several reasons, which include moving Lada-2107 assembly to the Izhevsk plant, phasing out production of the “classic” models, upgrading its main assembly line, and because Lada demand dropped off after the car-scrapping program was terminated.
AvtoVAZ considers the Lada Granta to be a long-term asset. In May 2011, Prime Minister Vladimir Putin test-drove the new car and then had trouble operating the trunk lock. Skeptics promptly called the car substandard.
However, there is currently no alternative to the Lada Granta in this price segment, said Investcafe analyst Kirill Markin. Buyers will not be deterred by an insignificant defect. Moreover, AvtoVAZ’s proactive response will help its reputation, he believes.
On the other hand, VTB Capital analyst Vladimir Bespalov warned that recurring defects could damage the company’s efforts to position itself as a manufacturer of reliable cars.

Moskovsky Komsomolets
Police allowances take on a whole new dimension
The government and the Interior Ministry said it would at least double the salaries of duly certified police officers even before the reform. It looks like they have finally come good on their promise.
When police officers received their payslips on Friday, they were pleasantly surprised to see that their hard work without days off had at long last been properly rewarded.
“We analyzed all the existing allowances and benefits and saw that the best way forward was to increase salaries based on rank and position,” Deputy Interior Minister Sergei Bulavin said. “We have also added seniority payments and bonuses for working in harsh conditions, working with state secrets and for tasks which carry a significant risk to life and health.”
However, most are skeptical about such statements, thinking that their January salaries simply include an extra payment for working during the holidays. Several police officers have agreed to share their feelings about this windfall increase in their incomes.
“I haven’t received my salary yet,” a district police officer says. “I honestly can’t believe that we will be getting this kind of money every month. I’m afraid that these fantastic sums are just our regular salaries plus bonuses for working during the New Year holidays,” he explains.
“I honestly wasn’t expecting this,” says another police officer. “We are used to promises not being fulfilled. We thought that all these complex recalculations would come down to about the same amount of money we are used to. I was stunned when they asked to me sign off a receipt for 49,000 rubles. I’ll never be able to make this kind of money anywhere else.”
This police officer has worked in the police for about ten years. His colleagues from other departments, such as criminal investigation, with the same length of experience received roughly the same amount in January as he did, compared with the approximately 30,000 they were on previously.
The average increase that officers with over 10 years’ experience received is 2,000 rubles more than that. Employees of district and municipal divisions had anywhere from 24,000 to 26,500 rubles added to their salaries. Employees of the central Interior Ministry did best, with salaries of senior operations officers jumping to a whopping 65,000 rubles a month.
Police working at street level might soon overtake their senior colleagues in terms of salaries, since they will be paid additional benefits – from their regional budgets.
“It all looks very suspicious to me,” says a Moscow police officer. “The government has suddenly become so generous 45 days before the elections. What an unlikely coincidence. The money is good, no question about it. However, we don’t know what will happen after the March elections. There were so many rallies after the parliamentary elections that we were busy practically every day of the week. Since there are so many disgruntled people, the authorities are trying to safeguard themselves by throwing us this bone in the form of salary increases.”

Komsomolskaya Pravda
Moscow to be expanded
Moscow authorities have decided to build on land next to the city
There will be no winners
Moscow’s authorities have announced an international contest to develop Greater Moscow. Ten selected groups of experts, each paid 250,000 Euro, will submit their proposals until September 2012. Chief Moscow architect Alexander Kuzmin says that experts from Austria, Australia, France, and Portugal have already shown interest in the project.
However, there will be no single winner.
“We will formulate a master development plan, based on the most interesting ideas, in 2014,” he said. The concept will be similar to Greater Paris, Greater London, and Greater Berlin.
Breaking out of the Moscow Ring Road
Until recently, Moscow looked like a fortress inside the Moscow Ring Road, says Mikhail Moskvin-Tarkhanov, chairman of the Moscow Commission for Urban Development. Other capitals, like London, are integrated with the suburbs to form one huge megalopolis with a shared transport system.
Alexander Strelnikov from the Research & Development Institute for Urban Development says that Greater London is 1.5 times larger than Moscow, but getting from A to B in London is fast and easy due to a streamlined transportation system.
Unlike in London, Moscow passengers have to pay when they change transport. However, from July 1, 2012, a mayoral executive order will introduce a single transport card, and passengers will not have to make additional payments.
Mr Strelnikov believes that Toronto, Canada, is a good example to follow, since this megalopolis in fact consists of six different cities that are brought together under a single, common budget.
...And break the rust belt
The experience of Greater London shows that as soon as a city gets bigger, workplaces start moving to the outskirts, says Mr. Moskvin-Tarkhanov. With this comes a danger of developing a “rust belt” of abandoned industrial enterprises, which might take several decades to get rid of.
Mr Kuzmin adds: “We have set ourselves the task of creating 1.5 million new jobs in Moscow’s suburbs. However, we have no plans of moving plants from Moscow to the suburbs.”
Dachas will becomes cottages
Comfortable low-rise housing will be built in the new suburbs. Infrastructure facilities, such as water, roads, kindergartens and schools, were previously the responsibility of investors.
“The philosophy of New Moscow is that the building of all infrastructure facilities is to be funded out of the municipal budget,” says Mr Moskvin-Tarkhanov. Once the infrastructure is in place, people will tear down their ramshackle dachas and build new, solid houses. It’s very convenient to have a house of your own in Moscow. Senior citizens will be the first to move to such houses, followed by freelancers and other Muscovites. There will be no program for moving people out of Old Moscow. People will decide for themselves whether they want to stay or move to the suburbs.
Campuses, parks and medical centers
The new areas will be used to build a parliamentary center, government buildings, medical centers and university campuses with adjacent parks, stadiums, and retail outlets.

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