Russian car sales fell more than forecast in October, plunging for a 10th consecutive month and forcing car makers to adjust production plans.
Sales of new cars and light commercial vehicles contracted 38.5 percent from a year earlier after a 29 percent drop in September, the Association of European Business in Russia said in a statement on Tuesday. That was worse than the median of six estimates in a Bloomberg survey for a 33 percent decline.
“Following a brief softening in August-September, the pace of the market decline is picking up speed again in October,” Joerg Schreiber, chairman of the AEB automobile manufacturers committee, said in the statement. “A key reason for this trend reversal is the now-stabilized ruble exchange rate, the sudden slump of which in August had led to pull-ahead sales which are now missing.”
Falling car sales are forcing carmakers to adjust their production plans for Russia. Ford Sollers will hold production for two months at its plant in Vsevolozhsk and will start voluntary layoffs, Vedemosti newspaper reported Oct. 30. Nissan Russian unit plans to cut its workforce by 500 employees at its St. Petersburg plant in 2016, while Avtovaz said it may halt production for a month in December. PricewaterhouseCoopers estimates the Russian car market may decline 45 percent in terms of vehicles sold this year and it may take six to seven years to rebound to sales levels of 2012.
The economy of the world’s largest energy exporter contracted 3.8 percent from a year earlier in the first nine months this year, hit by a decline in commodity prices and sanctions by the U.S. and the European Union. The central bank forecasts the economy won’t return to annual growth until 2017, which threatens to be Russia’s longest recession in two decades.
While inflation decelerated for a second month in October to 15.6 percent, it remains almost four times the central bank’s target of 4 percent, hampering efforts to revive the economy with further interest rate cuts.