Vladimir Putin’s grip on Russia may be iron tight but he is loosing the economic war as the Ruble’s collapse sparks controlled panic among foreign car makers.
Russia’s economy is facing its biggest financial crisis since 1998, oil prices around the world have dropped which is hitting Russia like a train hitting a stranded vehicle on the railway.
Russia has built its growth on the back of oil and gas exports and has used its new found economic strength to strong arm neighboring countries who are reliant on gas and oil over the winter.
As the US is now producing as much oil as Saudi Arabia thanks to new oil and gas extraction techniques, the price of oil worldwide has fallen to a near all time low.
Russia’s economic plight is being felt by car manufactures who surmised a strong, authoritarian, defacto leader of Russia was a good investment strategy.
The Ruble’s slide in value has forced car makers from GM, Jaguar and Audi to temporarily suspend sales. Jaguar Land Rover has halted sales until 19th December.
Volkswagen has halted sales of its cars and has not yet confirmed when it will restart selling again in Russia only confirming to do so by saying “in the near future”
Audi has halted production at its Russian plant in Kaluga from 22 Dec until 12 Jan, Toyota has no plans to suspend sales of its cars and will be raising prices to adjust for the possible hyper-inflation that is expected to follow.
BMW and Mini sold 33k vehicles in Russia through November and the impact of Russia’s wavering economy is said to be costing BMW up to 150 million euros of lost revenues.
Renault-Nissan is expected to face even bigger losses as the group invested heavily into the Russian market.