Russia's automotive market: 2013 results and development outlook

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Moscow, 28 January 2014 – Sergey Litvinenko, Senior Manager in PwC Russia's Automotive Practice, has tallied the 2013 results for the Russian and global car markets. He has reviewed new car sales, as well as analysed trends on the domestic used car market.

In 2013, the strongest car sales were recorded in China (up 15.7%), which remains the world's largest car market, and in the US (up 7.6%). Unlike China, other BRIC countries saw car sales decline in 2013, down 3.4% in Brazil and 10% in India. In Russia, sales dropped 5.5% in unit sales and 3% in monetary terms against the previous year due to the negative macroeconomic environment.

However, domestic sales of foreign cars assembled in Russia rose 9% against a backdrop of shrinking foreign car imports and Russian car sales. Among the positive trends, new car sales relatively stabilised in H2 2013, largely thanks to a preferential car loan programme that resumed in mid-2013. The Russian market is supported by the growing sales of SUVs, premium brands, Korean and Chinese brands while Russian carmaker AVTOVAZ saw its sales decline. Furthermore, sales of budget models have decreased.

In 2014, sales are projected to fall another 3% overall on the market, due to mildly pessimistic consumer sentiment and a possible increase in car prices. Meanwhile, we expect steady growth in sales of locally produced foreign-brand cars, partially owing to new car model sales in the mass market sector.

The secondary market has been resilient to economic changes. In 2013, used car sales rose 4% to 5.6mn units. Official dealers account for a mere 4% of this segment in Russia. However, this market ranks among the most promising and trade-in programmes are gaining in popularity.

Sergey Litvinenko notes:

"Official dealers are more and more interested in expanding into used car sales. The largest market players have already launched operations specialising in used car sales. The biggest growth in sales through official dealers may be seen in large megapolises with well-developed dealerships, capable of offering a wide and appealing selection of cars for buyers. This would be largely foreign made cars aged less than five years. In Moscow, official dealers account for 26% of the used car market, which is much higher than the national average. Furthermore, sales of cars to corporate clients is on the rise."
 
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