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Russia Far Away from Auto Sales Recovery

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Published on : Jun 22, 2015

It may not be until 2020 for automotive sales in Russia to reach 2012 pre-crisis levels, as reported by analysts at Russian Ministry of Industry and Trade and the Boston Consulting Group.

In 2012, total auto deliveries were recorded to be 2.8 million units but plummeted the following year in the midst of Western economic sanctions. Those were imposed as retaliation against Russia’s annexation of Crimea and also its involvement in the revolt by pro-Russian separatists carried in Ukraine. 
Since then, the market has contracted and the overall economy has been affected by devaluation of the ruble and tightening of credit.

As per the Association of European Business Automobile Manufacturers Committee, the auto sales in Russia dropped to 37.6% as compared to the previous year to 125,801 units which leaves the total drop in the year till date to 37.7% at 641,933 units. The full year sales are not going to go beyond 1.7 million, which is roughly 30% less than the 2.49 million deliveries in 2014.

The chairman of AEB said, there are indications of resumed consumer activity in Russia, but the auto market in Russia will have slow recovery. 

In December 2014, with the depreciating ruble value, a sharp increase in auto sales erased most of the held up auto demand and also led to higher sticker prices and interest rates on auto loans.

The diminishing market has also added to the debt burden of most of the auto dealers in Russia, many of whom are trying to renegotiate debts while are even considering to declare bankruptcy. 

As per Ministry of Industry and Trade, the government has doled out subsidies worth US$200 million and other forms of compensation for domestic automakers and manufacturers that have global presence operating in Russia.

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