The country’s new car market, once mulled to dethrone Europe’s No.1 – Germany – has been hit by economic weakness, dwindling consumer confidence and now harsh sanctions from both the EU and US.
The latest set of sanctions – all in relation to the political crisis in Ukraine – are not set in direct response to the automotive industry, but as they impact the broad economy, the ripples affect all business sectors.
“As yet there are no sanctions relating directly to industrial manufacturing businesses or which relate directly to manufacturing or selling cars in Russia, or Russian-owned businesses exporting to the U.S. or the E.U,” says a IHS Automotive report.
On the other hand, any measures from Russia in retaliation could favor the Renault Nissan alliance, as the company has the deepest integration locally. Rivals General Motors and Ford also have a big interest there, being among the largest production operators.
IHS Automotive’s report reveals that even before the crisis-triggered sanctions, Russian car sales were declining because of the economy slowdown and the rising value of the ruble hitting import purchases. June deliveries slumped 17.3% and the first six months decline was of 7.6%. Another report, coming from PriceWaterhouseCoopers predicts a full year decline of 12% to 2.3 – 2.4 million units.