Russia: Premium cars not affected by the economic crisis image

Even if the Russian auto market is on a steep decline, similarly to the country’s economy, the demand for luxury cars is still on high levels in the country.

The Russian economy has been in its deepest crisis in a decade last year. Car sales in Russia have reached in 2015 the lowest level since 2009, and forecasts show the decrease will continue in 2016. The market marked a 35.7 percent plunge, with 1,601,126 cars being sold in total, according to the Association of European Businesses. Even the projections for this year are not very encouraging, as demand will probably decline further by around 5 percent. However, a paradox is standing out from this gloomy situation. With prices for oil falling at the lowest level in 12 years, accompanied by inflation and continuous ruble devaluation, the luxury cars segment has not been affected whatsoever. Sales of brands like Porsche, Bentley, Rolls-Royce and Lexus all rose last year, even if Russia is fighting with the recession. “It’s bizarre,” said IHS Automotive analyst Tim Urquhart. “Even in the absolute depths of despair which the economy is in at the moment, these brands still seem to be doing ok.” It is not really a paradox, as it is a common trend in economies in which the imbalance between social classes is pronounced.

Bentley sales rose 7 percent year-on-year in 2015 and purchases of Rolls-Royce cars were up 5 percent. Porsche and Lexus, whose sales increased 12 and 6 percent respectively last year, are the only two brands to have maintained annual sales growth in Russia since the market peaked at almost 3 million sales a year in 2012. One of the factors of this curious trend is the weaker ruble, which lost considerably against the dollar, making cars cheaper in Russia and thus determining the wealthy Russians to buy more luxury products. They also looked at these circumstances as an investment strategy, storing their wealth in premium cars, analysts said.

Via Reuters