Global Insight Perspective | |
Significance | July's foreign passenger car sales in Russia maintained the strong growth rate that has been a consistent feature of the market throughout 2008 as sales volumes increased by 40% year-on-year to 199,332 units. |
Implications | Russia remains on track to overtake Germany as the world's fourth biggest passenger car market in 2008 according to the latest market data released by Association of European Businesses (AEB) in the Russian Federation. Foreign carmakers are currently investing in installing new plant capacity in Russia to help support increased demand fuelled by the robust Russian economy. |
Outlook | Although new model launches and enhanced price competition will continue to sustain high growth levels, maintaining the current growth rate of over 40% will prove difficult as pent-up demand is met in the booming Russian economy. |
The latest data released by the Association of European Businesses in the Russian Federation (AEB) shows that foreign passenger car sales in Russia rose by 40% year-on-year (y/y) to 199,332 units in July, on the back of continuing strong demand for mid-sized passenger and sport utility vehicles (SUVs). This AEB also published year-to-date (YTD) sales data which saw sales increase by 46% y/y in the first seven months of the year in comparison to the equivalent period in 2007 to 1,256,869 units. Hyundai overtook Chevrolet as the country's number-one selling foreign passenger carmaker in July, selling 20,680 units for the year. Hyundai is confident of meeting its 2008 sales targets, with its sales buoyed by a strong performances by the Tucson and Santa Fe SUVs. Hyundai is aiming to increase its own sales in Russia by 35.3% to 200,000 units and the company will be further bolstered in Russia when its new plant in St Petersburg comes on stream after construction began in June. Hyundai is likely to build a version of its i30 C-segment passenger car at the plant according to reports. The second biggest selling foreign car manufacturer in Russia in July was Toyota with 2008 units. The Japanese manufacturer is seeing its Russian sales volumes benefit from its new manufacturing plant in St Petersburg coming fully on stream, with the facility assembling the D-segment Camry. Toyota will welcome sales success in Russia at a time when it is beginning to struggle to maintain sales in other territories, notably Western Europe. Ford was the third best-selling carmaker during the month with 19,168 units, one place ahead of the previous market leader Chevrolet, which recorded a monthly sale figure of 18,831 units. However, Chevrolet still leads the way comfortably in the YTD sales terms, with sales of 144,532 units, ahead of Hyundai with 123,494 units, Ford with 116,794 units and Toyota with 108,855 units.
July 2008 Foreign Car Sales in Russia | ||||||
Brand | July 2008 | July 2007 | % Change | YTD 2008 | YTD 2007 | % Change |
Hyundai | 20,680 | 13,544 | 53 | 123,494 | 67,439 | 83 |
Toyota | 20,108 | 13,604 | 48 | 108,855 | 85,935 | 27 |
Ford | 25 | 15,248 | 26 | 116,794 | 97,030 | 20 |
Chevrolet | 18,831 | 14,730 | 28 | 144,532 | 99,197 | 46 |
Nissan | 13,967 | 10,084 | 39 | 91,514 | 62,137 | 47 |
Mitsubishi | 10,505 | 7,334 | 43 | 69,780 | 44,647 | 56 |
Renault | 11,132 | 9,020 | 23 | 67,722 | 54,189 | 25 |
Daewoo | 9,945 | 10,036 | -1 | 62,470 | 50,482 | 24 |
Opel | 8,622 | 5,357 | 61 | 62,145 | 32,736 | 90 |
Kia | 8,619 | 7,706 | 12 | 58,300 | N/A | 40 |
Source: AEB | ||||||
In the first seven months of the year, the Ford Focus was the country's best-selling passenger car with 56,380 units, with the model being manufactured in Ford's plant in St Petersburg. The Chevrolet Lacetti was the second vest-selling individual model with the C1 segment model posting sales of 51,488 units, with the Renault Logan in third position with French manufacturer's budget passenger car registering sales volumes of 48,761 units. As we reported yesterday, Opel was the fastest growing passenger car brand in Russia in both July and for the first seven months of the year, with General Motor's (GM's) German brand posting growth of 61% to 8,622 units for the former and impressive growth of 90% y/y in the latter category to 62,145 units, with the brand's Russian market sales bolstered by strong consumer demand for the Opel Astra C-segment segment passenger car.
Outlook and Implications
Although not a complete picture of the Russian passenger car market, as it does not include the sales of domestic brands such as Lada and Volga, the data released by the Association of European Businesses in the Russian Federation (AEB), is a reliable indicator of the market's overall state. The data recorded for July and the first seven months of the year for foreign car manufacturer's Russian sales show that the Russian passenger car market continues to boom off with the country's economy bolstered by rising oil and gas prices. While Russia's large reserves of coal, oil and gas have helped Russia's consumer goods industry post record sales in 2008, these very same factors have depressed the passenger car market in Western Europe. The increasing affluence and sophistication of Russian car buyers has seen consumers increasingly migrate from outmoded offerings from local manufacturers such as AvtoVAZ's Lada brand, to foreign passenger car designs being built in the country by an increasing number of manufacturers. The market will continue to grow rapidly in the short to medium terms, although it will be almost impossible to maintain the current level of growth into 2009 as pent-up demand in the market is gradually filled. Global Insight is forecasting full year sales of around 3.5 million, although this may be on the conservative side given the current rate of market growth.