General Motors Co., Audi and Jaguar Land Rover temporarily stopped selling cars in Russia this week, deciding that taking a timeout from the market was the best way to deal with the ruble’s collapse.
Automakers are battling a more than 40 percent drop in the value of the ruble since June, Russia’s biggest financial crisis since 1998. In recent weeks, Russian customers has been snapping up Porsches and other cars to convert their savings into something tangible. That temporary boon for the industry soon turned to a liability as the ruble’s drop ate into what the manufacturers got for their vehicles.
GM suspended sales to dealers on Dec. 16 to “manage its business risk” in light of the volatility of the ruble, the Detroit-based carmaker’s Russian unit said by e-mail. GM, which didn’t set a date to resume wholesale deliveries, will deliver Chevrolet, Opel and Cadillac cars that have already been purchased at the agreed-on price.
Audi also halted sales in Russia on Dec. 16. The Volkswagen AG unit will restart after it sets a new price list in the near future, said Aleksey Kozhukhov, a spokesman for Audi’s Russian operations. Audi, the No. 2 luxury-car brand globally, is also halting production at a plant in Kaluga from Dec. 22 to Jan. 12 for a regular holiday break.
The ruble’s abrupt drop is “causing major pain,” Arndt Ellinghorst, an analyst with Evercore ISI, said yesterday in a note. Jaguar Land Rover said yesterday that it had halted sales until Dec. 19 because of the current economic situation.
BMW AG, one of the few carmakers that discloses its ruble exposure, may lose 100 million euros ($123 million) to 150 million euros in earnings in the fourth quarter if the ruble loses half its value, Ellinghorst estimated. Daimler AG, Volkswagen, Renault SA and Hyundai Motor Co. probably face an even larger impact, the analyst said.
To reduce its Russia-related risks, BMW began reallocating cars to more attractive markets in early summer, said Nikolai Glies, a spokesman for the Munich-based company.
The world’s largest maker of luxury vehicles sold 33,465 BMW and Mini cars in Russia through November, a 17 percent decrease from last year. Industrywide auto sales have fallen 12 percent in the first 11 months of 2014.
Toyota Motor Corp. will implement price increases to adjust to the market conditions and is determining when and by how much, spokesman Jean-Yves Jault said in an e-mail. While there’s no plans to suspend sales at the moment, completing orders could be affected by the pending price increases.
Volkswagen said it’s still selling cars in Russia but is watching the market with concern.