Russian minister Rakhmanov predicts car sales will go up 6% this year

Article by Christian A., on March 22, 2012

Vehicle sales in the Russian market in 2012 are forecasted to increase by 6% from last year to 2.8 million units, according to Deputy Industry and Trade Minister Alexei Rakhmanov. The estimate shows a sharp slowdown from the 23% rise, which was experienced during the period from January to February. Western vehicle manufacturers are eyeing Russia to be one of the industry's most significant growth areas as issues on overcapacity and slowing sales afflict the more mature markets.

Rakhmanov related that a contributing factor to the slower growth is the discontinuation of a government-sponsored scrappage scheme, which would have benefited inexpensive local brands like Lada.

Under this scheme, drivers are offered a cash incentive of 50,000 ruble or 1,295 euro ($1,700) to trade in locally made automobiles that are 10 years or older. The scheme ended last year, after contributing 600,000 new sales to the general market. The Moscow-based Association of European Business has estimated the new sales for 2012 to be between 2.6 million and 3 million.

Reaching the top of that range would mean that the market would surpass the pre-crisis year of 2008, when Russia had the confidence to outperform Germany as the largest market in Europe.

There were 3.17 million vehicles sold in Germany last year. AEB compiles independent Russian car sales. Russian sales were down 50% in 2008 due to the economic downturn which adversely affected consumer confidence and exhausted access to financing.

Lada-owner AvtoVAZ, which is 25%-owned by Renault, had to be bailed out by the state to avoid its downfall. Rakhmanov believed that the country could ultimately be the No. 1 market in Europe, but "probably" not in 2012. [source: Autonews]

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Topics: russia, sales

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