When Renault opened a joint venture in Russia in 1998, it was returning to an old market after “a short period when we were not in business due to local events”, jokes Jean-Michel Jalinier, Renault’s general director for the Russia-CIS region.

Renault first opened in Russia in 1905, and the last tsar Nicholas II’s personal car fleet included five Renaults – expropriated by the Bolsheviks after the 1917 revolution.

Today, Renaults roll off a new production line in the same auto factory on Moscow’s Volgogradsky Prospekt that in Soviet times turned out Moskvich cars. It is a sign of the times. According to PwC, imported foreign car sales grew 60 per cent in the first half of this year to 510,000; sales of foreign cars assembled in Russia doubled to 205,000. Sales of used foreign cars grew 46 per cent to 150,000. But sales of Russian brands fell 23 per cent to 300,000.

PwC forecasts auto sales in Russia could more than double from 2m in 2006 to 4.5m by 2011.

New owners are trying to secure a long-term future for Russian auto makers in the fast-growing market. Avtovaz, maker of the Lada, is now owned by Rosoboronexport, the state arms export monopoly. Gaz, maker of commercial vehicles and Volga cars, is part of the business empire of tycoon Oleg Deripaska.

For now, however, foreign carmakers are reaping most of the rewards, Renault among them. But Mr Jalinier stresses that while its Russian venture, Renault Avtoframos, may be majority foreign-owned, it is in many ways a homegrown company.

“Of course, Russia needs a Russian car industry, and we are a representative of that Russian car industry. Today we have 2,400 people in the factory, out of which there are 21 foreigners, including me,” he says.

Renault has benefited from several fortuitous decisions.

One was to partner with the Moscow city government which, says Mr Jalinier, has proved supportive but not interfering.

The city acquired the premises of Moskvich (which had largely collapsed after the Soviet Union broke up), and brought them into a 50-50 joint venture with Renault in 1998. Over time, as Renault provided investment for a new manufacturing facility on the premises, the French company raised its share of the venture to 94.1 per cent.

The second was to stick with Russia even after the 1998 financial crisis struck.

“Of course there was a lot of discussion,” says Mr Jalinier. “I would say that the main driver was that [Renault’s] CEO at that time, Louis Schweitzer, really believed in this market.”

The French carmaker decided not to invest in a manufacturing facility at that time, but slowly to build up a sales network. Today that network includes 74 dealers in 61 towns and cities.

That left Renault well placed to take advantage of the economic recovery that began early in the decade. By 2003, it was ready to invest $250m in an assembly plant for 60,000 vehicles a year, which started production in April 2005. It is increasing capacity this year to 80,000, and plans to double capacity to 160,000 by 2009 with a further $150m investment.

The results have been impressive. In 1999, Renault sold 1,000 vehicles; by 2003 sales had increased to more than 10,000 vehicles. And, says Mr Jalinier, it is on track for another 10-fold increase within five or six years, with targeted sales in 2009 of 100,000. Last year it sold 72,484.

“Russia is one of the fastest-growing markets,” says Mr Jalinier. “Last year we increased sales by 150 per cent. So you can imagine when I go to a board meeting, and others say ‘I increased 0.5 per cent’, and I say 150 per cent, it is like a different planet.”

A final good decision by Renault was to focus on its Logan sedan model, the low-cost car designed for emerging markets. Logan is in the fastest-growing $8,000-$12,000 price segment, Mr Jalinier says, and competes effectively with, say, top-of-the-range Ladas. Close to 70 per cent of Renault’s Russian sales last year were Logans – the only model it assembles in Moscow.

The Russian Logan has also been adapted for the local market – with extra body protection to deal with the chemicals shovelled on to winter roads to melt the ice, and tweaks to help the engine cope with poor-quality fuel and start faultlessly in minus 30 degrees C.

Renault is now looking to increase the proportion of local content in its Russian-assembled cars from 50 per cent to 70 per cent in rouble terms, partly to guard against big currency fluctuations.