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Russian Automotive Market in October 2011: Passenger Cars Sales are Cooling Down
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Russian Automotive Market in October 2011: Passenger Car Sales are Cooling Down

Fri, 04/11/2011 - 17:05

Car sales in Russia are showing further signs of cooling down despite overall outstanding performance of the Russian automotive market throughout 10 months of 2011 with passenger car sales reaching 2.11 million vehicles. Gravitas Research anticipates this cool down to extend up to Q2 of 2012, when seasonal sales hike is expected to boost passenger car sales in Russia again.

Going through recovery phase, stability of the Russian economy is reflected in the strong position of ruble, slowly growing disposable income, recovering investment activity and increasing consumer confidence. Gravitas Research estimates that Russia’s GDP growth would reach 4.5-4.6 per cent by the end of the 2011 driven by the industrial production, export of natural resources and retail sector while keeping annual inflation rate below 7 per cent barrier.

It is important to note that attributed growth of the overall industrial production in Russia is propelled by the Russian automotive industry. During January - September of 2011, vehicle production in Russia reached 1.26 million passenger cars growing by more than a half compared to the same period of 2010 (52.9 per cent).

 

 Figure 1. Production of New Passenger Cars in Q3, Russia (January-September, 2010/2011)

 Production of New Passenger Cars in Q3, Russia (January-September, 2010/2011)

 

 Figure 2. Production Structure of New Passenger Cars in Q3, Russia (January-September, 2010/2011)

 Production Structure of New Passenger Cars in Q3, Russia (January-September, 2010/2011)

During 2011 growth of the passenger car, light commercial vehicles (LCV), medium and heavy commercial vehicle (MCV and HCV) segments was driven primarily by low car penetration rates (just 250 vehicles per 1000 people in Russia on average), successful extension of the old passenger car scrapping scheme to the first half of 2011 (H1), strong product offering in the lower price band vehicle segment, recovery of demand for all types of commercial vehicles, re-energized & aggressive strategies of vehicle dealerships and distribution networks, who survived the 2008-2010 economic recession in Russia, and other factors.

On the other hand, Russian automotive industry has many restraining factors that are expected to increase their influence throughout remainder of 2011 and beginning of 2012. Still low disposable income of the Russian population, high interest rates, growing production costs, slow pace of regional recovery from economic recession, significant bottlenecks in the automotive logistics and in particular in finished vehicle logistics among others are expected to pull the Russian automotive market down not allowing it to show its true capacities. 

 

Figure 3. Monthly New Passenger Car Sales and Growth Rates, Russia (2008, 2010-2011)

Monthly New Passenger Car Sales and Growth Rates, Russia (2008, 2010-2011)

After rather difficult 2009 and 2010 years for light vehicle sales including passenger car sales in Russia, year 2011 brought significant growth in vehicles sales that is getting close to pre-crisis 2008 sales figures, when during January-October 2008 passenger car sales reached almost 2.50 million vehicles. In 2011, while sales of new passenger cars reached astonishing 2.11 million vehicles during 10 months of 2011 or 42 per cent YOY growth compared to 2010 [Figure 3], market sales started to decelerate from April 2011 with cumulative year-on-year growth decreasing from 76 per cent in March to 42 per cent in October 2011. Such decline in market sales growth brings Russian automotive market closer to its natural growth without Governmental intervention into the market (e.g. finish of old passenger car scrapping scheme in June 2011).

 

 Figure 4. Sales of New Passenger Cars and Light Vehicles in Q3, Russia (January-September, 2010/2011)

 Sales of New Passenger Cars and Light Vehicles in Q3, Russia (January-September, 2010/2011)

 

 Figure 5. Sales of Used Passenger Cars and Light Vehicles in Q3, Russia (January-September, 2010/2011)

 Sales of Used Passenger Cars and Light Vehicles in Q3, Russia (January-September, 2010/2011)

 Table 1: Comparative Analysis of the Russian Automotive Market Performance. 
Car Sales by Month, 2010 -2011

Month

2010

2011

Monthly Sales

Cumulative Sales

Cumulative Change '10/09, %

Monthly Sales

Cumulative Sales

Cumulative Change '11/10, %

 Jan
74,086
74,086
-37%
127,564
127,564
72%
 Feb
91,922
166,008
-34%
165,518
293,082
77%
 Mar
126,701
292,709
-24%
223,429
516,511
76%
 Apr
163,299
456,008
-13%
235,711
752,222
65%
 May
158,600
614,608
-4%
235,170
987,392
61%
 Jun
174,838
789,446
4%
246,429
1,233,821
56%
 Jul
175,810
965,256
10%
224,620
1,458,441
51%
 Aug
169,773
1,135,029
15%
224,764
1,683,205
48%
 Sep
186,253
1,321,282
20%
235,552
1,918,757
45%
 Oct
188,478
1,509,760
24%
229,943
2,148,700
42%
 Nov
189,902
1,699,662
28%
-
-
-
 Dec
206,346
1,906,008
31%
-
-
-

 

Key Take Away Points:

  1. Russian automotive industry keeps generating good news for investors and industry stakeholders leading the industrial production growth in Russia in 2011
  2. New passenger car sales in January-October 2011 exceeded psychologically important barrier of 2 million unit and demonstrated 42 per cent growth over the same period of 2010.
  3. Sales of new commercial vehicles are also promising reaching 226.2 thousand units in January - September 2011 or 65 per cent of YOY growth.
  4. Gravitas Research estimates that sales of the new passenger cars in Russia are cooling down from now on until Q2 of 2012 when seasonal demand comes into the play
  5. Along with traditional market restraining factors, problems with automotive logistics in Russia are putting significant pressure on the local vehicle production and distribution in Russia.

 

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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