The country’s auto market was just two years ago poised to overtake Germany in size for the top position in Europe, but today the local currency’s collapse, economic uncertainties and mounting political tensions have led to an almost incredible sales slump.
Back when Russia was growing at an exponential rate, the Asian automakers decided to bet big on what was seen as a huge market with endless possibilities – but they now face a true test of their commitment. In recent years carmakers such as Japan’s Nissan, China’s Great Wall or South Korea’s Hyundai and its affiliate Kia have increasingly invested in Russia, securing a big chunk of the market – at the expense of European and US competitors. But today the prospects for all of them – with the ruble falling on the dollar almost 50% so far this year – are increasingly clouded by the state of the economy.
This week, already China’s Geely Automobile Holdings – which also owns Swedish premium brand Volvo – announced it could see a profit increase at just half the rate first previewed – because of lower internal sales and also partly due to the foreign exchange losses in Russia. Hyundai and Kia’s in-house think tank predict Russian car deliveries would fall 15% from the figures of 2013 to 2.37 million and a further 4% in 2015 – and by comparison Germany is expected to see sales of around 3.25 million units in 2014.