OREANDA-NEWS. July 29, 2009. PricewaterhouseCoopers presented a review of the Russian automotive market in the first half of 2009 called “Battling the crisis”. The negative effect of the global crisis on the Russian automotive market was one of the most pronounced in the world because of the market’s rapid growth in the preceding period and the rouble’s significant devaluation. Based on the results of the first six months, Russia was rated fifth in terms of new car sales among the European countries, reported the press-centre of PricewaterhouseCoopers.

Over the period the total market volume in money terms decreased by 62% as compared to the first half of 2008 to reach USD 12.8 billion. There was a 96% decrease in the import of second-hand foreign-brand cars.

Foreign-brand cars made in Russia sell better than other categories, both in quantitative and money terms. According to the results for the first six months, production of traditional Russian brands dropped by 65%; foreign brands, by 53%.

Due to overstocking and a decrease in demand, both Russian and foreign car manufacturers had to cut back significantly on production. In the first quarter of 2009, the reduction was 63% as compared to the same period in 2008; in the second quarter, it was 58%.

Inventories were an important but short-lived stimulus for the market; they provoked considerable price competition in the first six months of 2009 and prevented sales from plunging further. The main factors that caused a significant change in average car prices across all segments were: a significant change in the rouble exchange rate, large-scale discount sales, the large share of cars produced in 2008 in current year sales, and increased customs duties.

We do not expect any drastic changes in market dynamics in the second half of 2009, primarily because of deteriorating macroeconomic conditions and the exhaustion of inventories of cars produced in 2008. Also, a lot will depend on the measures taken by the government and the situation in the car loan market.