Russian car sales sink most in 4 years on ruble weakness

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Sales of new cars in Russia plunged by the most in more than four years in June as a weaker ruble curbed demand.

Automakers sold 199,398 vehicles last month, down 17 percent from a year earlier, the Association of European Businesses in Russia said in a statement. Sales declined 12 percent in May.

"The market continues its downward trend at an accelerating pace," Joerg Schreiber, chairman of the AEB’s vehicle manufacturers committee, said in the statement. "The market weakness has not reached its bottom yet."

The worsening of the downturn caused the lobby group to slash its full-year sales forecast for the country. The AEB now expected sales of cars and light commercial vehicles in Russia to drop 12 percent this year to 2.45 million units – far more pessimistic than its forecast earlier this year for a 1.6 percent decline.

Auto sales have tumbled in Russia as a weakening economy has been further hit by Western sanctions over Russia’s conflict with Ukraine, and as people delay making large purchases.

A decline this year would follow a 6 percent fall in car sales in 2013, which brought three years of double-digit percentage growth to an abrupt end.

Russia is struggling to revive economic growth after the standoff with the United States and the European Union over Ukraine weakened the ruble and spurred capital outflows. The ruble has declined nearly 7 percent against the U.S. dollar in the first quarter, the second-worst performance among 24 emerging-market currencies Bloomberg tracks. It's since gained 2.4 percent.

Western automakers such as Volkswagen, PSA/Peugeot-Citroen, General Motors, Ford and Renault have invested heavily in Russia on the expectation it would soon become Europe's biggest car market.

Bloomberg and Reuters contributed to this report

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