According to the 1H 2013 results, passenger car sales in Russia declined by 6% in unit terms and by 4.7% in monetary terms
Moscow – July 30, 2013 – Today Sergey Litvinenko, Senior Manager, PwC Automotive Practice, summarised the results of the first half of 2013 demonstrated by the Russian car markets. In addition to the traditional overview of the global and Russian passenger car markets, he talked about car loans as a support factor for the automotive market.
Since mid-2012, the Russian passenger car market has seen slower sales growth, and since March 2013 a negative growth trend has been seen in the market. According to the 1H 2013 results, passenger car sales in Russia declined by 6% in unit terms and by 4.7% in monetary terms. To certain extent, this trend has been caused by the effect of pent-up demand, which boosted the market in the post-crisis period and started gradually coming to naught since mid-2012. In addition, economic uncertainty in Russia and the EU, a cheaper rouble and high interest rates on loans have contributed to lower consumer activity among the Russian population.
Factoring in the revival of the subsidized car loans programme, our forecast for 2013 is 2.7 million new cars sold
By mid-year, the Russian market had reached a normal level, matching demand under existing conditions given the current state of the economy and the car market. On this basis, the projected level of sales in 2013, according to our estimates, is expected to drop by 6% against the previous year.
Factoring in the revival of the subsidized car loans programme, we anticipate that the sales decrease may now total from 1.5% to 3.0% depending on the degree of the programme's success. Thus, our forecast for 2013 is 2.7 million new cars sold.
We assume that the level of issuance of subsidized car loans in 2H 2013 may fluctuate within the range of 20,000 to 30,000 car loans per month, which would result in growth in 2013 sales by 80,000-120,000 cars (due to attraction of additional borrowers).
Sergey Litvinenko, Senior Manager, PwC Automotive Practice:
The maturity and the current state of the car loan market is the key factor driving further growth of the car market overall. At this point, Russia’s financial services market cannot offer car buyers a set of loan products and price that would be comparable to what is offered in developed countries. This is one of the constraining factors impeding further growth in the Russian passenger car market.The car market support measures offered by the government are essential and well-timed. The subsidized car loans programme will be able to support the car market and its participants. It should be taken into account that, as a general rule, such measures are temporary, while it is essential to ensure the systemic development of both the financial services sector (e.g. leasing products) and economy as a whole. Furthermore, it would be advisable to employ several instruments, government support measures, including but not limited to the passenger car scrappage programme, tax incentives, etc.