Less than half of the Russian car market remains

In April the Russian car market set a new negative record, new car sales fell 53 percent and the spring recovery never came. Lada led among Russian brands and Chevrolet among foreign brands, but almost all brands fell more than the market average, and some sharply. Authorities are discussing expanding subsidized auto loans, and a decision on extra support may come within two weeks.

The Russian car market set a new record in April, falling by more than half — by 53%. The traditional spring revival did not happen, and for most car brands the rate of decline exceeded the market average. A decision on additional state support for car sales may be made within two weeks.
Yesterday, the Association of European Businesses (AEB) published data on new car sales in Russia for January-April. According to the AEB, over the four months they fell by 44%, and in April alone — by 53%. Actual sales amounted to 525.8 thousand and 135.7 thousand vehicles, respectively. The market leader in January-April and for the month as a whole was the Russian brand Lada, and among foreign brands — the American Chevrolet. It is followed by Ford, Nissan and Hyundai. Thus, in April the Russian car market set a new record for the scale of its decline.
In March, the decline was 47%, but higher duties on foreign cars, the strengthening of the ruble and consumer uncertainty are leading to an almost complete halt in sales, says Igor Ponomarev, co-owner of the Genser dealer holding. The April data confirmed dealers’ fears that even the seasonal factor will not save Russia’s car market (sales usually pick up in spring), he adds. Mikhail Pak of IFC Metropol emphasizes that in April already more than half of the brands showed a decline below the market average. Igor Ponomarev also did not expect that “such brands as, say, Toyota or Hyundai would fall faster than the market” (by 59% and 71%, respectively). In his view, the decline in Japanese and Korean brands is mainly explained by the strengthening of the yen and the won against the ruble.
Only four brands posted growth in April — Volkswagen, Citroen, Seat and Hummer, but all of them, except Volkswagen, are growing due to the low base effect (that is, because of the small sales volume in 2008), notes Mikhail Pak. The premium brands Audi, BMW and Cadillac showed the smallest decline — up to February-March they had been growing. BMW representative Ksenia Klimushina notes that despite the crisis, the new BMW 7 Series is still in demand, and premium SUVs X5 and X6 are also selling well. What BMW considers mass-market models (the BMW 3 and 5 Series) are selling more slowly, Ms. Klimushina clarifies. Cadillac sales had been growing until April thanks to substantial discounts (up to 500,000 rubles), and these discounts will be offered for at least another month, says brand representative Roman Skolsky.
The best-selling cars at the end of April were the Samara family produced by AvtoVAZ. The most popular foreign car was the Ford Focus, followed by the Renault Logan, Chevrolet Lacetti and Lanos. However, none of these cars showed sales growth in April. The sharpest decline was seen in the Korean Chevrolet Lanos and Lacetti and the Japanese Mazda 3 and Mitsubishi Lancer X. The only foreign car to show growth in April was the Nissan Qashqai crossover (its sales jumped by 155%), but “this car used to be imported in insufficient quantities,” Igor Ponomarev explains.
Overall, the situation in the market is depressing, and what happens next is not entirely clear, says Mr. Ponomarev. Perhaps the market will revive in the summer after all, especially since in Moscow the decline in sales is not as severe as in Russia as a whole (for Genser it was about 30%). On the contrary, Mr. Pak argues that the capital’s buyers still have money left, but soon Moscow too will stop buying cars. AEB Vice Chairman of the Automobile Manufacturers Committee Martin Jahn expressed hope yesterday that sales would “gradually stabilize,” but did not say exactly when this would happen. He noted that “the key factor is sales financing,” meaning support for the buyer through subsidies and bonuses.
At present, the Ministry of Industry and Trade is negotiating with automakers and the Finance Ministry to expand the list of cars that will be sold to the public on credit at a rate subsidized by the federal budget. If today these subsidies apply to cars costing no more than 350,000 rubles, then a decision may now be made to include more expensive cars in the program, says one federal official. He adds that such a decision may be made within two weeks.