Russia: March sales on steep dive image

Once considered as a viable candidate to overtake Germany as Europe’s largest auto market, Russia has seen a stark contrast to the developments on the continent, in the US or China.

Last month’s figures for the light vehicle market were the worst in terms of volume and percentage decline over the past half decade after dropping like a hammer by 42.5%, according to data coming from the Moscow-based Association of European Business. After the first three months of the year deliveries across the auto market have slid 36.3% compared with the same period in 2014. And we also have to consider that 2014 was a negative year as well, with reductions in volumes starting as early as 2013. The situation was triggered initially by the feeble economical growth, after years of double-digit gains. The matters turned from worse to disastrous following Russia’s implication in the Ukraine crisis, which triggered numerous Western sanctions – weakening the country’s currency. Then Russia took the hardest blow when global oil prices plummeted.

So, the figures now have the brands not competing for the highest sales, but the lowest losses. In this instance the winner was Mercedes-Benz, which only reduced sales by 3 percent in March. AvtoVAZ’s Lada brand – the No.1 automaker in Russia – saw deliveries down 26 percent, South Korea’s Hyundai had its sales shrink 15 percent, while affiliate Kia lost 32 percent of volume and the largest European carmaker Volkswagen dropped 47 percent. According to IHS Automotive, the rather unique combo of macroeconomic and political factors have dragged the Russian light-vehicle market in what could be titled as an existential crisis, with positive result not expected until next year even under the most optimist scenarios.