AUTO MARKET IN RUSSIA KEEPS GROWING. VOLKSWAGEN GROWS 4,5 TIMES FASTER THAN THE MARKET AVERAGE


Photo:http://www.volkswagengrouprus.ru/ru/news/2011/05/13/volkswagen_group_rus_prazdnuet_1000_dnej_do_olimpijskix_igr_v_sochi.
Source of data: sostav.ru; ru.aebrus.ru

According to the Association of the European Business, which cumulates sales data from all carmakers, the Russian car market can reach 2008 pre-crisis level: 2,85 mln cars will be sold in 2012. Russian market can become #1 in Europe very soon: the current leader is Germany, where sales of new cars declined in 2012. In Jan-Aug 2012 the market growth rate in Russia was 14%. The national brand Lada was the leader (-11% vs Jan-Aug 2011) followed by Chevrolet (+20%) and Renault (+25%). Opel was #13 (+32%) and Cadillac was #46 (-10%). Volkswagen in Jan-Aug 2012 demonstrated the highest growth among the top 10 most popular automotive brands in Russia: +63% vs Jan-Aug 2011. This allowed VW Group to become #2 most successful producer in Russia leaving GM, which was #2 during the last several years. Lada-Renault-Nissan remains the strong leader owing to success of Renault (#3 brand, +25% growth) and Nissan (#7; +29%).

Segment C (example: Chevrolet Cruze) remains the most popular in Russia however the share of SUVs among the new cars sold in 2012 increased significantly vs 2011 owing to recent launches of Nissan Juke, Mitsubishi ASX, Citroen DS4, Suzuki SX4 and some others. This trend is very likely to continue the same in the remaining months of 2012 and also in 2013 when GM will launch Opel Mokka and Chevrolet Tracker.

The share of foreign brands keeps growing: it reached 79% in 2012 however 45% of the foreign cars sold in Russia were assembled in Russia. Currently most of the global big players (incl. GM, VW group, Hyundai-Kia, Toyota, Ford, PSA, Fiat-Chrysler and some others) have launched local production and/ or assembling cars in Russia.

Although Russia joined WTO in 2012 and promised to decrease import taxes, there will be no price decrease in the nearest future. J.Shreiber, General Manager Mazda Russia, said: “August 2012 was the best August in the Russian automotive market’s history in terms of sales. After the car recycling tax was introduced (in September 2012) it became clear to everybody that no price decrease will happen. Now, when there is no uncertainty and the high season for new cars sales just started, there are good reasons to believe in further growth in the rest of 2012” A.Schilykovsky, the sales director of Jaguar-Land Rover, agrees about 2012 perspectives but is more careful about the forecast for 2013: "Due to high season there are no reasons for a change in the growth trend, at least in 2012. Finally, Russia may become number 1 in Europe. Russian automotive market shows such good results mostly because of the crisis in European economy but after looking at statistics it becomes clear that the actual sales figures are not as good as it was expected in the beginning of 2012”.

The experts are quite careful about the further trends in automotive market in Russia: there is no consensus about the Russian economy’s trend. It is also worth mentioning that the consumers are not so confident in their future income growth like it was in the past 5-10 years. There may also be another “Russian specific” reason for sales growth: consumers are willing to spend more money for the expensive goods before the times change for the worse. This already happened in the crisis in 2008, in 1998 and earlier.

One of the reasons for the success of VW in Russia is its aggressive advertising support. In Jan-Jun 2012 it spent $22,3 mln for ATL support, which allowed VW to become #1 automotive advertiser and remain in Top 10 advertised brand among all categories in Russia. Its BTL budget is almost as high as ATL spend. VW is a sponsor of the Russian national football team (estimated cost of a contract: $5 mln) and VW Group is a sponsor of 2014 Winter Olympics in Sochi (estimated cost of a contract: $100 mln)