Russia Car Sales May Advance 18% This Year on Economy, Rebates

Russian sales of new cars and light trucks may rise about 18 percent this year as the economy recovers and the government encourages customers with a “cash-for-clunkers” program.

Sales may advance to 2.24 million vehicles this year, after gaining 30 percent last year to 1.9 million, David Thomas, chairman of the Association of European Businesses’ automobile manufacturers’ committee, told reporters today in Moscow.

Russia’s economy expanded 3.8 percent last year after shrinking 7.9 percent the previous year, the worst post-Soviet contraction on record. The economy may reach pre-crisis levels in 2011, Finance Minister Alexei Kudrin said Dec. 29.

“As the economy improved, on the back of stronger oil prices, consumer confidence has started to come back,” Mark Ovenden, the vice chairman of the AEB committee and Ford Motor Co.’s Russia chief, said in a statement distributed to reporters. “The outlook for 2011 is positive provided that the economy and ruble continue to strengthen.”

Sales may reach a pre-crisis level of 2.8 million to 2.9 million units next year, said Thomas, who is also president of Volvo Cars Russia. Lower interest rates, a stable ruble and the rebate program will stimulate demand, he said.

The government plans to prolong cash incentives for new car purchases this year, with 3.5 billion rubles ($116 million) allocated, Prime Minister Vladimir Putin said on Dec. 23. Spending last year reached about 21.5 billion rubles.

About 30 percent to 35 percent of new cars were bought under the rebate program, while 80 percent of the program supported domestic brands, according to the AEB.

OAO AvtoVAZ, Russia’s largest carmaker, led increases last year as the government incentives helped to more than double sales of its Lada models, according to the AEB’s statement.

Foreign carmakers including Volkswagen AG, Ford and Toyota Motor Corp. are increasing output in Russia and plan to roll out new models. Toyota, which produces 25,000 cars a year at its plant in St. Petersburg, plans to further increase production and may build new capacity to make as many as 150,000 cars a year, Vedomosti reported today, citing unidentified officials.