The country’s shrinking economy, deep currency troubles and political tensions surrounding the situation in Ukraine have led to a deep auto sales slump.
And global automakers are the ones taking the hardest hit, with imports crippled by the ruble’s fall of nearly 50% to the dollar, but they also look ready to endure the fallout in return for a long-term payoff stemming from the massive investments they did in recent years. Poised to take over Germany as the largest European auto market just two years ago, Russia’s auto industry took a dive in 2013 and plunged massively this year. But the carmakers already put hundreds of millions of dollars in localizing production, so they need to withstand the crisis and prepare for recovery. “It’s a bloodbath for everybody. All car manufacturers are losing money,” says Renault-Nissan CEO Carlos Ghosn. The French-Japanese alliance is one of the largest investors in the country, securing control of Russia’s biggest carmaker – AvtoVAZ.
Since last week, numerous companies – including General Motors, Audi, Renault-Nissan and Jaguar Land Rover have stopped temporarily or at least limited sales – mostly because of the volatility of the ruble – down more than 40% against the dollar this year. Others, including the alliance, Ford or BMW have hiked the prices to try and compensate for the currency headwinds. Data compiled from the Moscow-based Association of European Businesses shows that Russia’s auto sales have fallen 12% through the first eleven months of the year to 2.2 million.
Via Automotive News Europe