Foreign carmakers’ sales will continue to boom in Russia in the next few years although the market share of used foreign models will decline steadily, research showed on Thursday.
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Reuters said Russia’s car market is booming, fuelled by rising disposable incomes but also by zero import duty on car components, which encourages big car producers to build assembly plants in Russia.
Russia’s major car importer, Rolf, said in a statement cited by the news agency that it expected sales of new foreign cars, both imported and assembled in Russia, to grow 47% year-on-year in 2006 to 840,000 vehicles, or US$20 billion, and to soar to 1.5m vehicles by 2010.
Reuters noted that foreign imports are so popular that Rolf Group’s annual revenues rose by over 80% last year to $2bn. Russia’s top domestic carmaker Avtovaz , whose Soviet-era Lada model is still the basic runabout for millions of families across Russia, generates about twice as much a year.
In 2005, around 570,000 new foreign cars were sold in Russia for around $14.7 billion, up from 355,000 units, or $9.3 billion in 2004, according to Rolf’s estimates, the report added.
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By GlobalDataThe data reportedly excludes the Chevy Niva model, assembled under a joint-venture between Russia’s Avtovaz and General Motors at a plant in Russia.
Valery Tarakanov, Rolf’s top strategic marketing manager, told the news agency the increase will be mainly led by Japanese and South Korean car makers, which have around 37% and 28% of the market respectively, but, by 2010, European automakers will have gained ground and are expected to have captured 32% of the market, reducing the share of the market held by Asian rivals.
Rolf also told the news agency that sales of new Russian-made cars would also take market share from imports of second-hand foreign cars, but Russian car makers would have to roll out new models to meet tough environmental standards.
Reuters said Russia will introduce Euro2 standards in April 2006, Euro3 in January 2008 and Euro4 in January 2010 and will also make a transition to new petrol standards in 2007.
The report said Rolf forecasts overall sales of new foreign cars exceeding 1.5m by 2010, or $36bn, with 47% assembled in Russia compared to the current 19%. In 2005, 81% of foreign cars sold in Russia were imported, Reuters added.
