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Quarter One ’09 Car Sales Plunged 40% in Russia
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Quarter One ’09 Car Sales Plunged 40% in Russia

Wed, 01/04/2009 - 00:00

Latest data published by the Association of European Business in Russia reflects on the falling sales of passenger cars in Russia throughout the first quarter of 2009. By the end of March, passenger car sales dropped 40 per cent compared to the first three month of 2008. Since the beginning of 2009, monthly sales were unable to exceed 60 per cent of the previous year when the Russian automotive market demonstrated excellent growth dynamics. The total number of light vehicles sold in Russia in Q1 of 2009 reaching just 388,000 units, compared to 648,000 units in YOY sales.

Although the Russian automotive market was continuously growing over the last five years, the global economic crisis has taken its toll with automotive vehicle manufacturers stockpiling on unsold vehicles. Sales of foreign light vehicles started to plummet in November 2008 when a negative growth of 15 per cent was registered for the first time in a number of years.

Light Vehicles Sales (Russia), 2005-2008

Foreign Light Vehicles Sales by Month (Russia), 2008-2009

Gravitas Research _ light vehicle sales in Russia 2005 2006 2007 2008 _ automotive market             research Gravitas Research _ foreign light vehicle sales in Russia 2008 2009 by months _ automotive market research

The situation continued to decline in 2009 when monthly sales dropped 28 per cent YOY in January and 36 per cent YOY in February. In March, foreign vehicle manufacturers faced a 47 per cent drop in sales of light vehicles.

Model wise situation with top foreign selling models has not changed drastically. Demonstrating negative growth, the top selling models in Russia, with the exception of the Toyota Camry have had a negative 37 per cent YOY average growth. The highest hit was the Chevrolet Lacetti, with sales dropping more than half in Q1 of 2009.

Gravitas Research _ top car models sales in Russia 2009 Q1 _
automotive market research

At the same time, the difference in the sales volumes among the top 10 models has decreased significantly. While the difference between 75th percentile and 25th percentile reached almost 7,000 vehicles in 2008, in 2009 the same difference reduced to only 2,680 vehicles.

The main question remains, when will the Russian automotive market show signs of recovery as the sales for the past three months present a very dim picture for the remaining year ahead. In an effort for damage control, the Russian government has made positive steps to overcome market turmoil in the form of bailout packages for Russian vehicle manufacturers and subsidies to Russian consumers. Nevertheless, the prospects remain bleak for 2009. Devaluation of the rubble, increased import tariffs, the stiffness of the financial system to offer easy vehicle financing, the growing price of insurance and the uncertainty of Russians’ are effecting vehicle sales.

The fact that Russian government was able to demonstrate an understanding for the needs of the local vehicle manufacturers could be wasteful with recent announcements made by Ministry of Finance. The Ministry of Finance is looking for ways to increase existing transportation taxes giving regional authorities an additional source for covering budget holes while imposing tougher conditions for vehicle owners in Russia.

Current situation in the Russian automotive industry creates new challenges for all industry stakeholders …what should suppliers relying on Russia do to minimise risk?

To find out more, contact Gravitas Research analytics team

About Gravitas Research:
Gravitas Research is a specialized market research and consulting company, headquartered in London, UK. We publish premium market research reports, business analytics and industry analysis of the Russian, CEE and CIS industries and markets

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