OREANDA-NEWS. July 26, 2012. Stanley Root, partner and automotive industry leader, PwC Russia, has summarised the results of the first half of 2012 demonstrated by the Russian cars' markets and presented his vision of sustainable development of the Russian automotive market, reported the press-centre of PwC. 

In the first six months of 2012, passenger cars sales grew by 15% in unit terms, and by 26% in monetary terms as compared to the same period in 2011. A considerable growth of sales is observed for locally assembled foreign cars which currently account for 45% of the market (in the first six months of 2011: 38%).

The entry of foreign carmakers, introduction of localisation requirements and government measures to support the local industry have contributed to development of the Russian automotive sector. The annual output of cars increased by 70% from 2002 to 2011 (approximately 1 million in 2002 - 1.7 million in 2011). Along with the manufacturing, the car park was growing. From 2002 to 2011 it increased by 58%.

According to PwC estimations, in 10 years, annual sales of passenger cars in Russia may exceed 3.5 million units per year. We also expect that during the next 10 years the aggregate number of sold new passenger cars in Russia will be equal to the current number of passenger cars driving the country roads.

As soon as new cars find their way to owners, the need to scrap retired cars will emerge. The solution of matters related to scrappage of cars may become one of the priorities of the Russian automotive industry in the nearest future. For a sustainable development of the automotive industry in Russia, a healthy and self-sustaining disposal infrastructure is required.

Assuming the Russian automotive market reaches the average European level of annually scrapped cars of 6% of the car park which is currently equal to 35 million cars, Russia will have to scrap 2 million cars annually or about 20 million within 10 years. Moreover, during the next ten years, 10 million additional cars above 15 years old will require scrappage.

For an efficient disposal of retired vehicles, a well developed infrastructure is required, including:

stations for collection of retired vehicles;

facilities for disassembling of retired vehicles;

shredder facilities.

In the short-term, the government may boost creation of a profitable business by subsidising infrastructure construction or giving subventions to cover operating expenses of auto recycling facilities.

The basis for organisation of the whole disposal system should be the law which would define the roles of car manufacturers, importers, businesses involved in recycling and car owners to facilitate the recycling of cars.