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Car Sales In Russia In 2015 Could Dive Nearly 30 Per Cent

Car Sales In Russia in 2015 Could Dive Nearly 30 Per Cent.

GM Withdraws, But Ford Doubles Down.

Russia’s new vehicle sales are expected to fall nearly 30 per cent in 2015 to 1.81 million, as the weak rouble continues to push up prices of imported cars and sanctions enfeeble the economy, IHS Automotive said.

In March, light vehicle sales plunged 42.5 per cent to 139,850, bringing the first quarter performance 36.3 per cent lower at 383,691, IHS Auto said, quoting statistics from the Moscow-based Association of European Businesses.

According to IHS Auto’s Russian market analyst Svyatoslav Kuchko, the numbers may be bad, but probably won’t get much worse.

“I think that this March, the market has already reached the bottom in terms of year-on-year decline. In the coming months the market will continue to fall but not at such an accelerated rate,” Kuchko said.

Kuchko said a government loan program to boost car sales is helping, inflation is slowing and the rouble exchange rate is improving.

Auto manufacturers in Russia face a dilemma. Cut their losses and quit, or hang on losing money waiting for the rally and cash in sometime in the future. Last month General Motors decided to cut its losses and pretty much withdraw all its assets from Russia. The rest, so far, have decided to tough it out, take current losses on the chin and hope to feel smug when Russia eventually becomes Europe’s biggest market.

GM said it would withdraw Opel by the end of this year, and most of the mainstream Chevrolet vehicles. It will stick with Cadillac and upmarket Chevys like the Corvette and Camaro. GM will halt production at its St Petersburg plant by the middle of the year.

Sollers takeover
Ford Europe, which has a local partner Sollers, is not only hanging on in there, it announced the start of production of the new Mondeo, the first of at least four new models in will launch in Russia this year.

“While in the short term, Russia remains an extremely volatile and challenging market, we believe the market likely has significant potential in the longer term. This is why this year alone Ford Sollers is launching at least four more new Ford models, including the all-new Ford Mondeo, new Ford Focus and the new Ford Fiesta,” said Ted Cannis, President and CEO, Ford Sellers.

Ford said it is also taking full control of Sollers.

Late last year PricewaterhouseCoopers said Russian car sales could shrink another 35 per cent in 2015, after falling 10 per cent to 2.49 million in 2014.

The Russia economy will have to wait for a resurgence in the oil price, and an end to hostilities with Ukraine and the sanctions that go with this, before beginning to rally.

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