Russia’s burgeoning passenger and LCV market has “outperformed” expectations says the Association of European Businesses Automotive Manufacturers Committee (AEB AMC), which nonetheless injected a note of caution when viewing the figures.
The country – for so long languishing in the economic doldrums as a combination of low oil prices and international economic sanctions took their toll – has posted a remarkable 12 months of continuous auto sales growth – although the AEB highlights this is from a historically low base.
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Latest figures from the AEB show Russia’s car market continued powering ahead last month with the overall light vehicle market up by 24.7% and 133,177 units sold, but there is still some ground to claw back after four years of plummeting numbers.
“It is unlikely these high double digit recovery rates can be sustained,” AEB AMC chairman, Joerg Schreiber told just-auto in Moscow. “There is a little bit of feeling in the market the upcoming [Presidential] election – there won’t be any surprises – but there is always a lingering notion prices might go up.
“So there is a notion we had better to purchase now and see what the election will be. There is a distrust towards government when it comes to price stability [so] there may be a pull-through effect. We don’t have booming consumer confidence… [although] we have slight improvement which is good news.
“There is some sort of stabilisation – that slight improvement combined with the delayed prices effect when people had postponed purchases – coming together. The market has outperformed our expectations.”
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By GlobalDataThe AEB AMC chairman’s cautionary words come during the same week when Presidential elections are widely expected to see current incumbent, Vladimir Putin retain his seat at head of The Kremlin table, with the Russian government continuing to take a keen interest in the manufacturing sector,
The administration has ploughed significant investment into the automotive sector during its long, dark years that saw 48 months of plunging sales and although this may now start to tail off as the market recovers, Moscow is likely to continue a range of stimuli.
“Access to credit is becoming easier as Russian banks base rates are falling,” added Schreiber. “It is double digit for the end consumer, but that compares to 25% a few years ago. You can have subsidised credit, yes that is a getting better so the burden is getting smaller for consumers.
“There will be less support for the retail customer, but that is natural as the market recovers and the [national] budget is tight. The majority of support is going direct to manufacturers and largely it is being taken away from retail customers.
“The other thing sometimes – we have got used to it – there are a lot of declarations around budget time [during] October-November-December.
There are rules talking about different levels of support. Before the budget is finally [agreed] – and this year was a particularly tough process which extended into 2018 – there is nothing to talk about. But the likely outcome, there will be heavy reduction on supporting retail direct.”
See also: Russian car market up 25% in February
