New car sales in Russia are forecast to fall by between 8 and 12 percent this year, the latest prediction by industry analysts say the downturn is due to a sharp economic slowdown and devaluation of the ruble.
This year, sales of new cars in Russia are expected to range in the region of about 2.3 million to 2.4 million vehicles. The expected slow down comes on the back of a decline in sales in 2013 which fell by 5.5 percent to 2.6 million and auto industry revenue fell 3 percent to $69 billion.
In the first half, sales fell 7 percent to 1.2 million units and in value terms the market declined 3 percent to $31.5 billion. The Ukraine crisis and the weaker ruble have contributed to pushing car prices up because even though vehicles are manufactured in Russia many parts and components are imported.
From a consumer perspective, increased interest rates on auto loans has also slowed demand. The market is predicted to recover to 2012 level’s by 2016 and to grow by about 3 to 3.5 percent a year thereafter. Last month Moscow-based Association of European Businesses (AEB) predicted a 12 percent drop in unit sales this year compared to its previous forecast of a 1.6 percent decline.