Economy, Auto

Russia Car Sales Fall 13%

Russia Car Sales Fall 13%Russia Car Sales Fall 13%

Russian new car sales fell 13% in June to 122,633, the Association of European Businesses said in a report released on Friday.

Registrations for the first six months declined by 14.1% to 672,140 compared with last year's first half sales of 782,431.

The contraction of Russian car sales in 2016 will be double previous forecasts after weak performance in the first half, according to AEB. Sales of new cars and light commercial vehicles will shrink by 10% in 2016 to 1.44 million units, the Moscow-based association said. The previous forecast predicted a decline by less than 5% to 1.53 million vehicles.

"This forecast implies a slowdown of the negative trend in the second half of 2016, to a level of 6-7% or half of what we have seen so far this year," Joerg Schreiber, chairman of the AEB Automobile Manufacturers Committee, said in the statement. Russian carmaker Lada has also been particularly hard hit by the change in buying habits with a 12% decline in car sales year-on-year, selling 140,353 units in that period.

In June, the carmaker also witnessed a more sudden 16% decline in the sales of units with only 22,229 cars sold. Other Russian vehicle makers like GAZ LCV, which produces medium-sized trucks sold 24,750 vehicles in the six-month period indicating a growth of 6% in that time. Y/y sales for the Russian car producer saw a zero-percent growth with 6,103 vehicles sold.

Korean and Japanese carmakers saw their profits shrink in the six-month period with Hyundai, Toyota, Nissan, Mazda, Datsun, Mitsubishi and Ssanyong, whereas China's newer and cheaper entrants saw their sales increase in the six months to June period. Hyundai and Kia, previously booming car brands in the Russian market, saw a 19% and 8% decline year-on-year in their sales. China's Lifan, on the other hand, saw a 63% increase in sales during the same period selling 7,565 cars in that period. Changan and Brilliance, two other Chinese manufacturers, also saw their sales increase in the Russian market. In the six-month period, Changan sold 307 cars denoting a 38% increase in sales, whereas Brilliance sold 646 cars indicating another 41% increase in sales.

Iranian car sales in the Russian market are also too low to be counted, as they do not appear on the Association of European Businesses chart for international automakers.

Overall, Russian car sales have been declining for 18 months. The reduced forecast suggests automakers do not expect households to step up big purchases until at least next year, as the country struggles to exit its longest recession in two decades.

After a decade of annual sales growth, in excess of 10%, the Russian auto industry has been badly hit by an economic crisis driven by low oil prices and western sanctions over the Ukraine crisis. Last year, car sales fell 36% to 1.6 million, according to AEB.