French carmaker Peugeot stepped up the pace in its hunt for a bigger share of the Russian automobile market Tuesday, when the company opened a training center aimed at improving the quality of service provided under its name.

The training center in the heart of Moscow will train employees from Peugeot dealerships and service centers around Russia and the other C.I.S. countries. "The principal goal is to train the Peugeot network in Russia and the C.I.S. countries, to train them to work with new models and to improve the quality of knowledge of all people working in the network," said the company's C.I.S. director, Gerard Jacquin.

"It is completely in line with our goal to increase sales in Russia and with the potential we see in this country and the C.I.S.," he told The Russia Journal.

The company has invested "several million euros" in the project, according to Peugeot's international director, Christian Delous.

"In a few years, Peugeot has increased its share of the market for imported cars from a little more than 1 percent to, hopefully, 7 percent in 2002," he explained.

"Our mission is to continue in this manner, and for this reason we have chosen to invest in this sort of center."

The center will offer free technical and commercial training to more than 500 employees of Peugeot's 19 partners, 23 dealers, 50 showrooms and 38 service centers spread across the C.I.S. states, offering more than 12,000 teaching hours per year.

Peugeot's sales forecast for 2002 is around 7,000 vehicles, up by a massive 65 percent on last year's sales, making it the eighth-strongest importer on the Russian market.

The company, which was the world's sixth-strongest car manufacturer in 2001, recording profits of 1.7 billion euros and with expected 2002 sales of 3.3 million vehicles, aims to increase Russian sales to 8,400 cars in 2003.

The opening of the center in Moscow is "one part of a well-thought-out marketing strategy," said Yelena Sakhnova, an automobile specialist at United Financial Group in Moscow.

"Of course, the market for imported cars is growing, but you still have to introduce innovative measures," she added.

By the third quarter of 2002, this market stood at 57,000, according to Sakhnova's calculations. Daewoo is the strongest importer, with around 7,000 cars so far this year, followed by Skoda, Volkswagen, Nissan and Peugeot.

By the end of the year, experts anticipate the imported car market to be around 100,000, and this figure is expected to grow.

Peugeot is certainly not the only foreign manufacturer to sense the potential in the Russian market – not only for imported cars, but also for cars manufactured in Russia.

Earlier this year, the world's biggest automobile manufacturer, U.S.-based General Motors, began a joint venture production in Tolyaty with Russian auto giant Avtovaz.

Production and sales of the Chevrolet Niva, constructed in a new factory in the Russian car capital is "so far, so good," according to Pavel Widel, GM's marketing manager. Four hundred and fifty cars have been sold this year, and the joint venture expects sales to reach 35,000 by the end of next year and up to 75,000 by 2004, Widel added. General Motors, which sells Opel, Saab, Chevrolet and Cadillac automobiles, has experienced a doubling in sales since last year to 3,000 vehicles, and expects this figure to double again by 2004.

In October, Ford, the world's second-largest manufacturer, opened a factory in Russia's Leningrad Oblast, where it produces its flagship Focus model for the Russian market. The factory expects to produce 2,000 Focuses this year and 8,000 by the end of next year.

Russian government policy aims to encourage foreign car manufacturers to begin production in Russia, said Andrei Kormilitsin, an automobile analyst at Troika Dialog.

Interest in internal investment is growing due to "government policy for protecting the domestic automobile market through higher import duties" said Kormilitsin.

"The government's main idea is to increase the presence of international producers in Russia," he said.

However, despite reports to the contrary, Volkswagen has made "no official decision" to start production in Russia, says Alexander Gordasevich, Volkswagen's marketing manager in Russia.

But the German manufacturer, which is reported to control 12 percent of the market, is actively working on several projects aimed at increasing its share, says Gordasevich. Its strategy includes the development of its already substantial dealer network and the creation of a special spare-parts storage site aimed at cutting the delay between order and delivery.

Toyota Motors experienced "record growth" in January to September 2002. Sales of Toyota and Lexus vehicles reached 5,413 by the third quarter of 2002, up 87 percent on the same period last year. "I am sure that, after the introduction of the new Landcruiser 100, our yearly sales will reach 8,000 in European Russia," said Norio Naka, president of Toyota Russia.

Given the current woes of domestic Russian producers, epitomized by low sales and stuttering production at Russia's Goliath, Avtovaz, the steady growth of the import sector of the Russian car industry may seem an enigma.

However, while demand for new Russian-made vehicles is decreasing due to a surge in the supply of second-hand cars, Russia's burgeoning middle class, dissatisfied with the spartan Ladas and with greater disposable incomes, is demanding more expensive, imported vehicles.

The growing retail finance sector and consumer loans are making it easier for Russian middle-earners to afford vehicles in the affordable $15,000 segment, according to Kormilitsin of Troika Dialog.

"It is estimated that consumer loans increase purchasing power by 40 percent," he explained. "Overall confidence and average disposable incomes are growing."