CB: acceleration of a falling new car market in the fourth quarter – the risk to GDP

CB: acceleration of a falling new car market in the fourth quarter – the risk to GDP


The Central Bank expects an acceleration in the decline of the new car market in late 2015. According to representatives of Bank of Russia, this process has a negative impact on the dynamics of retail sales and can be a risk factor for the country’s GDP.

MOSCOW, 12 Nov. The accelerating decline of sales of new cars in Russia in annual terms in the fourth quarter of this year, is a risk factor for GDP, says the Bulletin of the Department of studies and forecasting of the Central Bank.

“The high base effect of the end of 2014 promises the acceleration of a falling new car market in the remaining months of 2015 in annual terms. It probably will negatively affect the dynamics of all retail sales in annual terms in the fourth quarter of 2015, as a risk factor for GDP,” the study said.

According to AEB, sales of new cars and light commercial vehicles in Russia in October 2015 dropped by 38.5% yoy, to nearly 130 thousand cars. In September sales decreased by 28.6%. “Accelerating the pace of decline in annual terms due to the sharp changes of the market last year: the sinking since April against the background of crisis and the rise since September, when the state launched the program to support demand and observed the increased demand for cars amid the rapid decline of the ruble,” — explains the Central Bank.

According to researchers of the regulator, in monthly dynamics of sales in 2015 no sharp fluctuations, and it is consistent with the picture of the pre-crisis 2013. “You can assume that there was a structural shift down in production and consumption of cars and has formed a new equilibrium at a lower level”, — stated in the Bulletin. In the current situation, the growth rate of the share of local production of cars this year were the highest, says the Central Bank.

The authors of the study draw attention to the lower availability of the car for the average buyer because of the growth of the rouble prices for cars and the lack of growth of real money incomes of consumers. “We can expect that consumers will be much less likely to change their cars for new ones, and that will increase the share of purchase of the first car at a more affordable price on the secondary market. The growth prospects of the market remains uncertain,” says the regulator.