Car makers are pulling down the shutters at dealerships across Russia because of the currency crisis which has seen a 40% drop in the value of the ruble.
General Motors, Audi and Jaguar Land Rover have temporarily stopped selling cars in the country which is in the middle of its biggest financial crisis since 1998.
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Russian customers have been buying up premium models in a bid to convert their savings into something tangible but they have now been hit as the ruble’s drop has eaten away at manufacturers’ profits
GM, Audi and JLR suspended sales this week in order to “manage business risk”. Audi said it would restart after it sets a new price list in the near future. The VW brand is also halting production at its Kaluga plant from 22 December to 12 January although this is part of a regular holiday break.
Bloomberg News reported BMW, one of the few carmakers that discloses its ruble exposure, could lose EUR100m (US$123m) to EUR150m in earnings in the fourth quarter if the ruble loses half its value.
BMW told Bloomberg that, since the summer, it has been reallocating cars to more attractive markets. It sold 33,465 BMW and Mini cars in Russia to the end of November, a 17% fall from last year. Industry wide sales have fallen 12% in the first 11 months of this year.
