Russia is a bloodbath market for carmakers, says Renault-Nissan CEO

Article by Christian Andrei, on December 21, 2014

Russia has become a place for a "bloodbath" for carmakers, no thanks to a weakening ruble, according to Renault-Nissan chief executive Carlos Ghosn. He remarked that both Nissan and Renault are not taking orders anymore for some models in Russia, and could even hike the tag for other vehicles if the ruble continues to weaken.

Much worse, a falling ruble is making the Russian auto market shrink further. “It's red ink, people are losing money, all car manufacturers are losing money," Ghosn said. He said that Renault and Nissan are suspending orders on some models until they could see where “this situation is going.”

So far this, the Russian ruble has dropped by around 50 percent against the dollar, placing more pressure to carmakers to sell their products at a higher price while facing lower demand. Carmakers like General Motors, Audi and Jaguar Land Rover have suspended sales in Russia due to the dropping ruble.

As Nissan, it has hiked the prices on half of its offerings in Russia by between 5 percent and 8 percent – like more expensive locally built models that need high levels of imported parts. While Ghosn remarked that he still is confident that the Russian market would "stabilize," the falling ruble made it currently difficult to make longer-term plans.

He, however, noted that the Renault-Nissan alliance is doing better than other carmaker in Russia and is even gaining market share – all thanks to its partnership with AvtoVAZ that protects it from the drop of the ruble.

While combined sales of Renault, Nissan and AvtoVAZ vehicles dropped 8 percent to 682,841 units in the first 11 months of the year, but their market share grew from 29.6 percent to 30.7 percent.

Confident enough, Ghosn is targeting to triple sales in the next three years in Russia, where Nissan, Renault and Lada models account for over a third of vehicles sold in the country.

Lada is a brand of AvtoVAZ, in which Renault and Nissan holds a majority stake. Nissan has seen its sales in Russia surge 10 percent in the first 11 months of 2014 to 141,879 units, while all carmakers have logged a 12-percent fall, according to data from the Association of European Businesses in Russia.

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