11. Avtomir Group

Country

Kazakhstan

Year of entry

2008

Industry/ business area

Car retail

Entry mode

Export. Two dealer centers were opened in Astana and Karaganda almost at the same time.

Motives

The strategic goal of the company at the end of 2007 was to build a strong federal commercial network and to develop the business.

High saturation level of the Moscow’s car retail market made Avtomir Group chose expansion to the regions to be one of the prioritized directions of the company.

Car market of Kazakhstan had a great potential at that time. Analysts said that Kazakhstan customers had a positive attitude towards Russian brands, which were associated with stability. The increasing demand for cars in Kazakhstan was also a crucial factor which influenced the decision to enter this particular market.

Firm specific advantages used on the foreign market

Avtomir is the number one Russian car retailer in terms of variety of cars brands, which allows to the company to react quickly on any changes in consumer demand. It has a strong brand, recognition of customers, good reputation. Its aim in 2007 was to modernize the service the company provides to its customers, so Avtomir Group enlarged the service package. Furthermore, Avtomir Group’s product portfolio fit the consumers demand for middle class cars.

First mover or follower

The specific feature of the car retail market is the fact that car producers arrange tenders for obtaining the dealership of particular brand. Moreover, they provide territorial inviolability for their dealers, which means that different dealers don’t sell the same car brand in the same geographic area. Moreover, car producers have a control over retail prices and they defend retailers from “price wars”.

Compare to other Russian companies operating in the same country and the same business area.

Type of state involvement in the process of internationalization

There was no direct state participation in the internationalization process. The partnership with Sberbank started in 2007 was a good back up for a company during the process of internationalization, since it become possible for a company to rely on the state bank in case of credit issues.

Evaluation of the success of the internationalization

Expansion of the business to Kazakhstan was a beneficial strategic step of Avtomir Group due to several reasons. Firstly, car sales in Kazakhstan are constantly growing. The amount of cars sold in 2010 and 2011 increased by 14% and 31% respectively in comparison to the previous years.²⁹ Secondly, the most popular brand amoung Kazakhstan consumers was LADA (40% of total sales), which emphasizes the consumers demand for budget cars. Thirdly, automobiles from Russia were the most preferable ones among consumers in 2011. The percentage of cars brought from Russia which were sold in Kazakhstan in 2011 was about 54%. Finally, the analysis of the regional sales structure of the company revealed that the fastest growth of sales in 2011 occurred in Kazakhstan (the increment was about 119,6%).³⁰