Data released by the Moscow-based Association of European Businesses (AEB) shows that sales of new passenger cars and LCVs in Russia decreased by 50% in the first eleven months of 2009 and by 46% year-on-year in November.

The 46% drop in November was seen as indicative of some improvement in the trend over the previous month, but the weakness in the market is showing little sign of fast turnaround.

"Whilst it is encouraging to see a slightly better November (year-to-year) the level of retail demand remains weak coming into December which is traditionally Russia's strongest month of vehicle sales," said the AEB.

The AEB also called for 'clarity on all the details of government support for the industry and that this support is applied to all brands sold in Russia'.

The organisation noted that the higher level of import duties on imported cars introduced at the beginning of the year 'continues to impact many of our members' and asked for the government to reconsider a decision to extend the increased duties and include a reduction to 2008 levels in its industry support package.

This will also prepare the route to harmonise import duties with Belarus and Kazakhstan when the Customs Union becomes operational, the AEB said.

"In the AEB Automobile Manufacturers Committee we hope that at the end of the year the sales will go up as it usually happens in December. At the same time we are afraid that sharp increase in used vehicles imported from Belorussia may cause serious damage for the automakers in Russia as a result of creation the Customs Union in 2010," said Martin Jahn, Vice Chairman of the AEB Automobile Manufacturers Committee.

Many in Russia's auto industry will be hoping that December's sales offer some hope for a recovery to the market in 2010. Analysts say that Russia's car market should benefit in 2010 from a government scrappage scheme as well as some rebound to the economy after 2010's severe downturn.

Russia's car market is heading for a level of around 1.5m units in 2009 which compares with 3m in 2008.

See also: EMERGING MARKETS ANALYSIS: Russia to see slow recovery

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