Imaginechina/AP Images

Russian Car Sales Slump for Seventh Month as Plunge Eases to 28%

Russian car sales dropped at the slowest pace since their slump resumed in January as the government used subsidies and other incentives to counter falling consumption.

Sales of new cars and light commercial vehicles declined 28 percent in July from a year earlier after a 30 percent decrease in June, the Association of European Businesses in Russia said Monday in a statement. That matched the median of six forecasts in a Bloomberg survey.

The government has stepped in to coax crisis-scarred Russians into buying a car, offering subsidies on auto loans and discounts for drivers willing to part with their old vehicles. Car sales have withered, contracting during all but one month since April 2014, as the economy lurched into its first recession in six years, inflation soared and high borrowing costs stifled credit demand.

The result looks “almost like a piece of good news,” Joerg Schreiber, chairman of the AEB automobile manufacturers committee, said in the statement. “The fundamental performance of the automotive market continues to disappoint though, in the framework of a struggling economy and falling consumer incomes.”

The AEB last month lowered its forecast for car sales this year, predicting a 36 percent decline compared with a drop of 24 percent forecast earlier.

“Purchase incentives provided through government programs and by the market participants themselves have proven instrumental in avoiding an ever sharper decline,” Schreiber said. Still, they “would need to be enhanced significantly to be able to reverse the trend in a substantial manner.”

Read this next: