MOSCOW (Reuters) -- Russian new-car sales growth accelerated to 31 percent year-on-year in May, boosted by a government scrappage scheme and a broad economic recovery, data from the Association of European Businesses showed.
Sales for the year to date are still 5 percent below the same period in 2009, the data showed, but a disastrous January and February have now been followed by three straight months of growth that started in March.
"The current trend indicates that the market will be in growth on a year-to-date basis for the second half of the year," David Thomas, chairman of the AEB's Automobile Manufacturers Committee, said in a statement.
The Russian car industry is in recovery mode after annual sales halved amid the global economic crisis in 2009. The AEB said 157,937 cars were sold in Russia in May, a slight decrease on sales of 163,299 units in April, partly reflecting May's public holidays.
Scrapping program gets more cash
The upturn coincides with a state-backed program to offer 50,000 rubles ($1,718) for trading in locally made vehicles that are more than 10 years old -- a scheme set to receive an extra $340 million from the government, it was announced this week.
The program has been most beneficial to Russia's flagship Lada brand, which sold 45,521 cars last month, more than four times its nearest competitor. Lada was up 62 percent year on year in May.
Thomas said he thought the incentive program should be extended to cars made overseas.
"The scheme continues to have the greatest impact on the cheapest end of the market. I would urge the government to expand the scheme to all cars," he said in a statement. Thomas also runs Ford-owned Volvo in Russia.
Along with Ford, Renault, which owns 25 percent of Lada-maker AvtoVAZ, Volkswagen, GM Group and Kia are the biggest market players in Russia, according to the AEB.