Russian New Car Sales Rebound

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Russian New Car Sales Rebound
Cars parked in front of a Chinese Geely brand dealer showroom in Saint Petersburg, Russia. © DiPres / shutterstock.com

Russian new passenger car sales surged to 617,000 units in the first five months of 2024, marking an 81% rebound from slumping sales in the same period last year, according to the Association of European Businesses in Russia.

“In May 2024, the Russian automobile market continued its rapid growth, up 72.5% compared to May last year,” Alexei Kalitsev, chairman of the AEB’s Automobile Manufacturers Committee, said in a June 4 news release. He added that March 2024 new passenger car sales exceeded the figure for the corresponding month of last year by 102%, while April saw a 78% increase.

However, the association expects this trend of nearly doubling sales volume to slow down in the near future.

“One of the factors that traditionally affects sales volumes during this period is the holiday season, which reduces traffic at dealership centers. June will show whether the slowdown in market growth is sustainable,” Kalitsev said.

He also noted that potential changes in the key interest rate by the Russian Central Bank and the level and timing of increases in the disposal fee could impact the market situation.

Most European, Japanese, and South Korean carmakers suspended production and exited the Russian market after Moscow dispatched troops to Ukraine in February 2022, often selling their operations for a nominal fee due to difficulties in extracting funds.

In 2022, the Russian economy was severely impacted by Western banking and technology sanctions imposed in response to the country’s aggression in Ukraine. The rebound in car sales is largely attributed to the Russian government’s promotion of domestic and Chinese vehicles.

The gaps left by legacy Western automakers such as Volkswagen, BMW, Ford, and Renault-Nissan were filled by numerous Chinese and Iranian substitutes. Local car manufacturing and assembly plants were primarily handed over to domestic and Chinese operators sometimes for a fraction of their original value.

Korean automaker Hyundai was one of the last international car brands to leave the Russian market, selling its two car plants in St. Petersburg to a Russian company named Art-Finance in January this year. One of the plants had previously belonged to General Motors before Hyundai purchased it in 2020. Together, the two plants have a combined annual capacity of around 300,000 vehicles.

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