The economic downturn, the weakening local currency and the ongoing political tensions have eroded consumer confidence and demand in Russia, prompting German carmaker Volkswagen AG to stop selling the Seat brand there.
According to the largest European automaker, the company’s Spanish brand Seat will not be present on the Russian market by early next year as all these factors contributed to an unprecedented drop in deliveries. “The SEAT brand is stopping sales of new cars in Russia from January 1, 2015, due to the contraction of sectors in which it is represented, the general economic situation in Russia and currency rate fluctuations,” according to a spokesperson.
New car sales have been among the largest injured sectors of the overall economy this year, after they started their contraction in 2013 coming from years of double-digit increases. The business segment was seriously impacted as the country’s economy continued its sharp downturn this year, a fall worsened by the Western sanctions imposed on Moscow’s behavior and role in the crisis in Ukraine. Russia, a large producer and exporter of oil has also been hit by the unexpected drop in price.
Even as the government decided to try and relief the ailing car industry by reintroducing a car scrappage scheme, new car deliveries continued to slide by around 10% in October, while ten-month sales dropped even further, by 13%.