Russia's car sales to gain up to 37% by 2008-PwC
Thu Jun 30, 2005
MOSCOW, June 30 (Reuters) - New car sales in Russia are expected to rise to between 1.9 million and 2.2 million vehicles by 2008 from nearly 1.6 million in 2004, or as much as 37.5 percent, PriceWaterhouseCoopers forecast in a report.
The government, meanwhile, is hoping to raise the market share of locally assembled cars to around 75 percent as major U.S., European and Asian auto producers establish or expand existing manufacturing plants in Russia, said the report, made available to Reuters on Thursday.
Recent data shows that sales of Russian autos, which traditionally have dominated the market for the cheapest cars, have been declining steadily as growing affluence among Russia's middle classes fuels demand for foreign cars.
Russians for the first time bought more foreign cars, including imported, locally assembled and used models, than Russian autos in the first half of 2005 -- 439,000 foreign cars compared to 381,000 Russian cars.
In terms of sales by dollar value, foreign cars have long dominated the market, and the gap further widened in the first half when Russian cars sales amounted to only $2.4 billion of the $10.4 billion market.
Some 225,000 imported new cars were sold in the first six months of the year, compared with 280,000 in the whole of 2004. A further 51,000 locally assembled foreign cars were also sold in the first half.
In another sign of growing purchasing power among Russian consumers, sales of new imported cars for the first time outnumbered imports of second-hand foreign cars, which totalled 163,000 in the first half compared with 317,000 in the whole of last year.
Sales of used foreign cars have traditionally outstripped those of new cars and as recently as 2003 outnumbered them by more than three to one.
RUSSIAN MAKES LOSING SHARE
Sales of Russian cars, whose average sale price has risen to $6,400 from $5,800 in the course of the past year, numbered 381,000 in the first half compared with 880,000 during the whole of 2004, said the report.
The market share of Russian cars, which struggle to compete with foreign cars on quality and performance, has drifted down to 46 percent in the first half of the year from 55 percent in 2004 and 58 percent in 2003. The report said the price advantage of Russian cars was being eroded by domestic inflation, which was 11.7 percent last year and is likely to be more than 10 percent this year, and increasingly competitive offerings from foreign makers.
Imports of foreign cars, including second-hand models, took a 47 percent share in the first half, while the market share of locally assembled foreign cars was 6 percent.
Foreign manufacturers are making the biggest inroads in the Russian market with compacts selling for around $10,000, led by South Korea's GM Daewoo and Hyundai (005380.KS: Quote, Profile, Research), Japan's Mitsubishi (7211.T: Quote, Profile, Research), Nissan (7201.T: Quote, Profile, Research) and Toyota (7203.T: Quote, Profile, Research).
Renault (RENA.PA: Quote, Profile, Research), Ford (F.N: Quote, Profile, Research), KIA and General Motors (GM.N: Quote, Profile, Research) already assemble cars in Russia, and DaimlerChrysler (DCX.N: Quote, Profile, Research), Toyota, Ssangyong (003620.KS: Quote, Profile, Research) and VW (VOWG.DE: Quote, Profile, Research) are planning local manufacturing operations.
Russian makers such as AvtoVAZ (AVAZ.RTS: Quote, Profile, Research) are responding by launching new models, offering credit and leasing facilities and slowly phasing out obsolete cars.
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