Russian Car Sales Decline More Than Forecast as Distress Spreadsby and
Car sales fall 29% in January, more than 23% median in survey
Government readies $650 million in additional aid for industry
Russian car sales plunged more than forecast in January, extending a collapse last year that’s forcing the government to plow billions more to support the ailing industry.
Sales of new cars and light commercial vehicles fell 29 percent from a year earlier after a 46 percent drop in December, the Association of European Businesses in Moscow said in a statement on Monday. The median of four estimates in a Bloomberg survey was for a 23 percent decline.
Continued weakness in oil prices is adding to the plight of automakers already wrestling with weak consumer demand and ruble devaluation. With the economy of the world’s biggest energy exporter on track for its second year of recession, the government is readying about 50 billion rubles ($650 million) in state support for the car industry this year on top of the 43 billion rubles it received in 2015, according to Prime Minister Dmitry Medvedev.
“The continuing price inflation fueled by a very weak currency will remain a major challenge on the long way to a market recovery,” Joerg Schreiber, chairman of the AEB automobile manufacturers committee, said in the statement. “The recently announced extension of the government support to the automotive sector in the first half of 2016 is a positive step.”
The government has stepped in to coax crisis-scarred Russians into buying cars, offering subsidies on auto loans and discounts for drivers willing to part with their old vehicles. The state-support measures have slowed the decline in the car market by half, according to Industry Minister Denis Manturov.
Demand for cars will probably decline another 4.7 percent this year after a 36 percent drop in 2015, the AEB’s Schreiber said last month.
The ruble is down 4.5 percent against the dollar this year, the fourth-worst performer among 24 emerging-market currencies tracked by Bloomberg.