MOSCOW. (RIA Novosti political commentator Alexander YUROV)

Virtually all Russian auto factories, whose top managers have at long last comprehended the Government's clear-cut signals, are now negotiating with foreign partners.

Consequently, they are beginning to work in line with market principles.

General Motors and AvtoVAZ have teamed up to mass-produce the Chevy-Niva offroader. GAZ is preparing to assemble Indian sports utility vehicles (SUV). Production of South Korea's Spectra sedan will be sited in Izhevsk. Moreover, the Severstal-Auto company has announced plans to produce South Korean Ssang Yong Rexton jeep vehicles at a factory that had assembled small and inexpensive Oka cars. Curiously enough, but Severstal-Auto managers have announced the most ambitious plans for cooperating with foreign auto-makers, while presenting this project.

Corporate enterprises will diversify car range, turning out at least three differently priced offroader versions. All in all, it is intended to assemble some 40,000 cars per year. Severstal-Auto also wants to modify its traditional UAZ jeep vehicle that will feature Rexton platforms.

It turns out that the Serpukhov auto factory not far from Moscow is the only enterprise that wants to produce Russia's smallest 0.8-c.c. cars. Enterprise people think that the Oka car is not very profitable. Adequate profitability would enable this factory to mass-produce Oka cars or their more promising Oka-2 versions. However, it will take about $70 million to retool production, experts say. Consequently, some other scenarios are being examined.

Assistant factory manager Gennady Bykov believes that the enterprise which faces no mind-boggling technical problems can assemble foreign cars, offroaders included. The administration has already negotiated with some anonymous Chinese and German auto-makers. Quite possibly, the Serpukhov enterprise will start making inexpensive Chinese SUV-s or luxury German sedans in place of Oka cars.

The activity of Russian auto enterprises is quite explainable because Russian authorities are not going to change their plans. Car-accessory import duties have already been minimized. In addition, the Government plans to charge restrictive import duties on all used cars before the year is out.

Severstal-Auto, one of the largest Russian car-makers, estimates that used cars now account for 11 percent of the entire local car market. This means that over 90,000 used foreign cars were sold here in January-March 2005. The Russian Government now allows the importation of seven-year-old cars. However, their age limit will soon be reduced to five years. In other words, used-car imports will become unprofitable.

A new car-market segment will therefore emerge in this country by late 2005. Russian car factories are unable to fill in this segment completely. This is why they are now looking for foreign partners. By the way, the latter perceive such cooperation as highly profitable because the Russian auto industry provides competitive advantages. For example, it costs much less to assemble foreign cars here than to build a car factory from scratch. Severstal-Auto estimates that it will take $56 million to launch production of Ssang Yong Rexton vehicles. Initial Ford Focus production cost twice as much.