According to analyst PricewaterhouseCooopers (PwC), Russia’s automotive market could shrink by as much as 12% in 2014.
According to the report, PwC is forecasting a drop somewhere between 8% and 12% for the Russian market considerably more than the 3% decline predicted back in January.
Despite that, the market will still finish up at around 2.3 to 2.4 million vehicles sold.
It’s tempting to conflate the downturn in the market with sanctions imposed by the USA and other countries (Australia included), but the Russian economy had begun to weaken last year, when total sales of 2.6 million represented a 5.5% dip.
According to PwC, the slower sales in 2013 are linked to the country’s support for separatists in eastern Ukraine, but the weakening currency, the ruble has played a larger role.
Not only are imports more expensive since the ruble lost ground against other major currencies, many vehicles built domestically have come up in price too, due to their reliance on imported parts. Added to that is the higher cost of purchasing as finance interest rates have risen.
Mr Sergei Litvinenko, a senior spokesman at PwC’s Russian office, expects the market to return to 2012 levels within the next two to three years, with growth of three to 3.5% per annum after that recovery.
The news comes as media outlets report Russia has imposed counter-sanctions against the European Union, the USA, Australia, Canada and Norway. Imports of food from Australia have been banned for one year, potentially costing local farmers billions.
Source – motoring.com