Russia’s slowing sales may affect Renault’s recovery in Europe

Renault’s plan to fix Europe sales may be undermined by slowing growth in Russia.

The Russian car market is expected to slow and possibly decline this year, after three years of gains of more than 10 percent. This may affect Renault’s efforts to offset slumping demand in Europe, according to a Bloomberg report. Renault was counting on growth in Russia after suffering the worst sales decline in Europe last year. Renault controls Avtovaz, the maker of local popular brand Lada.

The Russian car market rose thanks to a developing middle class, with forecasts saying it will surpass Germany in volume by 2014. Western carmakers including Renault, VW, Ford and GM have been expanding their capacity in Russia.

However, the local market is volatile, suffering a 49 percent plunge in 2009 before recovering over the past three years. According to IHS Automotive, Russian car sales this year are forecast to rise 2.3 percent after an 11 percent increase to 2.98 million cars and light commercial vehicles in 2012.

The Renault-Nissan group increased 2012 sales by 1 percent to 890,433 vehicles worldwide, with the Renault brand’s 23 percent surge offsetting a 7 percent decline for Lada. Renault’s sales of 189,852 cars in Russia last year represented 7.3 percent of its global deliveries.