Russian car sales fell 43 percent last month, as the economy slides into recession.
Sales of new cars and light commercial vehicles shrank to 139,850 units in March from 243,332 a year earlier, the Association of European Businesses in Russia said Wednesday in a statement. That matched the median estimate of six economists surveyed by Bloomberg.
Car producers in Russia are suffering as last year’s ruble collapse raises the cost of imported parts and the country’s economic woes curb consumer demand. General Motors Co. will idle a plant in St. Petersburg this year and halt sales of its Opel brand and most Chevrolet models. Other producers, including Volkswagen AG and PSA Peugeot Citroen, plan to cut jobs in the country.
“What we are seeing now in the sales statistics is the long-predicted ‘hole’ in consumer demand, caused by the pull-ahead of car purchases at the end of last year, and compounded by heavy price inflation in the current year,” Joerg Schreiber, chairman of the busines association’s Automobile Manufacturers Committee, said in its statement. “The situation will stabilize, but we are not at this point yet.”
The economy of the world’s biggest energy exporter is forecast to shrink 3 percent this year, hurt by U.S. and European sanctions over Ukraine and a slump in oil prices to six-year lows, according to government forecasts. Retail sales may fall 8.2 percent, and annual inflation may end the year at 12.2 percent, after accelerating to 16.9 percent in March, the highest in 13 years.
Russia’s currency has begun strengthening this year, gaining almost 13 percent against the dollar in February, the best performance among more than 170 currency tracked by Bloomberg. The currency gained 2.6 percent to 53.65 per dollar as of 2:22 p.m. in Moscow.
To fight the decline in the industry, Russia’s government began to subsidize car loans, extended a scrappage program and allowed individuals to lease automobiles.
The government measures will stem the contraction in car sales, which may drop 24 percent this year instead of 50 percent without support, Industry Minister Denis Manturov said in March.