Russia tests automakers’ limits image

In an incredible recessionary context that has besieged Russia this year, automakers see millions of dollars invested in the country threatened and fear the long-term impact could affect their global businesses.

Russia, once poised to overcome Germany as Europe’s largest automotive market has seen recently an incredible disaster: Western sanctions cripple the economy, the free fall of the local currency strains everyone and the country’s oil might has tumbled on the incredible low prices seen on the global market. Peter Schmidt, consultant at the research firm AID says that the market’s “recovery” – sales only dropped 2.3% last month is not owed to the government’s scrappage program, but to Russians trying to spend their economies in ruble before it goes down any more. Overall, for the year auto sales have dropped 26%, while imports have been crippled, falling almost 50%.

The automakers have invested billions of dollars in Russia during the past decade, when the country saw double-digit sales increases each year, are taking a beating now. The worst prospects could be in store for Renault and Nissan, which together with AvtoVaz (they have a controlling stake) commend almost a third of the market. Volkswagen is also in jeopardy, having around 11% market share, while General Motors, Jaguar Land Rover and Audi have temporarily stopped selling cars.

Via Forbes