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Source: China Daily China Daily

Russia's red-hot car market stalls

Published: 18 Mar 2014 01:52:46 PST

Russia's red-hot car market stalls

Cars are parked outside a Lada dealership in St. Petersburg November 27, 2012. [Photo/Agencies]

A year of disappointing auto sales in Russia has dealers and carmakers worried that a once-red hot market that was set to become Europe's largest may have slipped out of gear.

Stuttering economic growth, unhelpful demographic trends and a coming increase in car capacity could dampen one of the few bright spots in a global market that is under pressure.

In a Moscow showroom of dealership Premium Motors, packed with budget models such as Russian-made Ladas and Chevrolets, a dealer bemoaned the lack of customers. "In October and November - sales were bad ... there were few people," he said.

In a traffic-clogged city peppered with Porsches and Maseratis - trademarks of the super-rich who profited personally from Russia's resource wealth - it is the middle class who provide the bread-and-butter sales.

Yet after three years of double-digit growth as Russia recovered from the 2008-2009 economic crisis, sales so far this year are down around 6 percent according to the Association of European Businesses, a Moscow-based lobby group that counts major auto makers among its members.

Auto executives, resolutely bullish that Russia's rising middle class will support sales long-term, do not predict another crisis, but are worried about an extended contraction.

"We are certainly concerned in the short term," said Ted Cannis, chief executive of Ford Sollers, a joint venture between Ford and Russian carmaker Sollers, who sees the fall as a short-term trend. "It's not a crisis, but it's certainly not going in the right direction.

24-Dec-2013

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