Thursday, 11 February 2010

Car sales slide again

Car sales in Russia slipped to a new low in January, shrinking 37 per cent year-on-year compared to the eye of the crisis. Yet analysts insist there are signs that domestic producers are beginning to turn the corner.
"January sales are traditionally weak," said Martin Jahn, vice chairman of the Association of European Businesses' automobile industry committee. "We expect a revival in the Russian market in February."
The report is a second blow to hopes of an auto revival, coming on the back of a PricewaterhouseCoopers survey that showed car sales falling 56 per cent in 2009, more than the 49 per cent cited by the AEB.
Thanks to the extended New Year's holiday, analysts say it is difficult to compare January data but the sales crash can, in part, be put down to government support for the industry only just getting into gear.
"Due to red tape the government approved interest rate subsidies on car loans for 2010 only at the end of January, which might have locked in some demand," said Yelena Sakhnova, a transport analyst at VTB.
While some rebound is expected this year, it is unlikely to compensate for the catastrophic crash experienced in 2009."Overall we expect light commercial vehicles and car sales to rise about 5 percent this year to 1.5 million units," said Sakhnova.
Industry think tank Autostat says the market has fallen back to the level it was at seven years ago, but that this benefits some cheaper models, particularly those assembled in Russia.
Sales of Renault's Moscow-assembled Logan and Daewoo's Nexia, built in Rostov-on-Don and Uzbekistan, surged by 12 and 57 per cent, respectively. Both vehicles cost under $10,000.
Meanwhile, nine of the 10 best-selling models of passenger cars are produced domestically, the AEB report said.
Getting in on the act, Ruspromauto has brought out its budget-range GAZelle-Econom at a similar price.
The manufacturer said that problems in the financial sector were one of the key reasons for people downshifting.
"The share of our light commercial vehicles, bought on credit or leased, dropped from 40 per cent to 5 per cent, so we had to invent our own financing products to bring it back to 20 per cent by the year's end," said Anisimova. And while Russia's car industry has taken a battering during the crisis, some of the impact can be put down to high growth figures during the boom.
"The impact of the crisis on the Russian market was noticeable because of the strong market growth in the preceding period," said Stanley Root, an auto industry analyst at PricewaterhouseCoopers.
Developing dealer and logistics infrastructure will allow Russia to quickly convert economic growth into an upturn in the automotive market, he added.Russia's cars per person remains low, leaving plenty of potential for expansion.
Fiat is the latest automaker looking to make inroads into the Russian market, announcing that it plans to assemble one of its "C" class sedans together with Sollers, a Russian off-road manufacturer, RIA Novosti reported.
The Italian-based company's connections with Russia date back to the 1960s, when its technology was used to make AvtoVAZ's Lada cars.

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