Discounts and government assistance are unable to stop the decline of the car market

Sales of new passenger cars and light commercial vehicles in Russia in July 2016 fell at an annual rate of 16.6%, says the report of the Association of European businesses (AEB).

Just over a month had sold 109,41 thousand cars, that is 21 742 thousand units less than in July 2015 and 13 223 thousand less than in June 2016. Compared to the previous month, the sales decline even accelerated in June they declined “only” 14.5%.

Starting in 2016, the year in Russia sold 781 thousand 605 cars, which is 14.4% less than for Jan—Jul 2015, (if it was 913,583 thousand). Compared to the first half of the sales decline also accelerated in January-June sales declined yoy by 14.1%.

“Whether we like it or not, but in General the current state of the market is far from being able to at least stabilize at a modest level of last year. Despite steady prices, great discounts and the continued support from the government, the main problem is that at the moment there are only a limited number of customers who have the desire and ability to spend money on purchasing a new car,” explained the Chairman of the Committee automakers Association of Joerg Schreiber.

Earlier AEB downgraded its forecast for car sales in 2016 to 1.44 million units — even in the crisis year of 2009 machines the Russians have purchased more (to 1.47 million). Compared to last year, the car market should shrink by about 10.3 percent, but for the first seven months, sales decreased by 14.4%. To exit the year at forecast level in the last five months, the sales decline should slow to about 6%.

“Long-term demand remains high and actually increases due to the fact that the purchase decision is postponed. It is only a matter of time when the demand is realized. However, it is still unclear how long we will have to wait to change the situation for the better,” commented Schreiber.

In June 2016, Schreiber warned that the path to stabilizing the market remains bumpy”.

A leader in the Russian market in July 2016 remains AVTOVAZ, which managed to increase (year on year) sales of cars under the brand Lada 4% to 21,754 thousand Took second and third place Kia and Hyundai decreased sales by 11% and 12% respectively.

The main outsiders of the month have become such brands as SsangYong (down 97%), Geely (minus 80%) and Honda (minus 74%). While sales of Alfa Romeo cars at lower base has grown six-fold (from 2 to 12 units), and the Jaguar half (from 110 to 220).

In the mass segment to increase sales, in addition to AVTOVAZ, could only Skoda (+12% to 4670). At the same time, sales of UAZ, which in June showed a marked increase (+21%), fell by 36%.

The status of the main best seller of the Russian market by the end of July has kept the Hyundai Solaris, sales of which in annual terms fell by 22.9% (7904). In second place were the Kia Rio (minus the 16,6%, 7632 units), the third will be held Lada Granta (minus of 30.4%, 6334). Fourth place in the list of most sold in Russia of cars holds new AVTOVAZ Lada Vesta in July were sold in Russia 5198 of these machines.

“The fall in the automotive market continues and even increases compared to the previous year, – the analyst of “VTB Capital” Vladimir Bespalov. – I think the main reason is weak consumer demand and low consumer confidence: people prefer not to buy such durable goods as cars. Someone goes to the secondary market, someone just puts off buying a new car. All this affects the demand.”
While the situation is developing on a negative scenario, the signs of the expected recovery has not been observed, adds Bespalov. According to his forecast, by the end of 2016 will be a market decline of 5-10%, but given recent trends it may exceed 10%.

Despite discounts on some brands in Russia have been gradually increasing the price of cars, says Bespalov: in the past year, manufacturers have not had time to reflect currency fluctuations in price. “It also affects the demand,” he says.