Russia Car-Market Drop Forecast to Continue After 36% Plunge

  • Deliveries in 2015 fell to six-year low of 1.6 million autos
  • Sales are set to decline another 4.7%, business lobby AEB says

Russian car sales are set to fall for a fourth consecutive year after plunging in 2015 to the lowest level since the country’s previous recession in 2009, according to the Association of European Businesses.

Demand will probably decline another 4.7 percent in 2016 to 1.53 million cars and light commercial vehicles, Joerg Schreiber, chairman of the AEB’s Automobile Manufacturers Committee, told reporters in Moscow Thursday. Sales dropped 36 percent to 1.6 million deliveries last year from 2.49 million in 2014, he said.

Last year was the worst in a decade for the Russian economy, hurting the middle class, Prime Minister Dmitry Medvedev said Wednesday. Prices for oil, Russia’s main export earner, fell to 12-year low, prompting Finance Minister Anton Siluanov at a conference Wednesday to recall the 1998 crisis when a ruble devaluation accompanied by inflation eroded incomes and living standards. In the past three months, the ruble has been the third-worst performer among 24 emerging-market currencies.

The current exchange rate “creates a difficult situation for automakers, prompting them to boost prices,” Schreiber said. “Still, 2016 will be less turbulent for the car market. The pace of sales decline is set to slow.”

December sales dropped 46 percent from an abnormally high base a year earlier to 147,000 vehicles, according to the AEB. The decline was in line with the median 47 percent plunge predicted by six analysts in a Bloomberg survey.

Russia’s prolonged slump is a challenge to French manufacturer Renault SA and Japan’s Nissan Motor Co., which together control local market leader AvtoVAZ, the maker of Lada-brand cars. The three partners, which target a share of at least 40 percent of the country’s car market this year, accounted for 32 percent of Russian auto sales in 2015.