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September 15, 2010 01:00 AM

Smog, holidays can't slow Russia rebound

James R. Crate
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    New-car sales in Russia soared another 51 percent in August over the same month a year earlier as consumers continued to take advantage of the government's scrapping incentives.

    The sharp sales increase came even though August is a traditional holiday month in Russia. In addition, much of central Russia, including the populous Moscow area, was blanketed for more than a week by thick choking smog from forest fires that kept many residents at home.

    The August gain, to 168,627, lifted sales for the year-to-date to 1,135,074 million units, up 14 percent over the same period of 2009, the Moscow-based Association of European Businesses reported.

    “It is very encouraging to see the continued upward trend for the industry even through the traditional holiday month of August…and despite some concerns that the smog in Moscow might affect the industry,” David Thomas, chairman of the AEB's auto manufacturers' committee, said in a statement.

    The incentives program, which was launched in March, offers car buyers 50,000 rubles (about $1,635) to trade-in cars that are at least 10 years old for new models built in Russia. The program was extended during the summer with a 10.5 billion-ruble cash injection, indicating enough support to trade about 210,000 cars.

    Scrapping subsidy extended again

    Moving to keep the heat turned up high under the market, Prime Minister Vladimir Putin on Tuesday committed another 14 billion rubles to extend the program into 2011.

    The program has unleashed a torrent of pent-up demand.

    AvtoVAZ, the Russian maker of Lada-brand vehicles, continues to be the biggest beneficiary of the subsidy. Lada's sales rose 55 percent in August over a year earlier to a market-leading 45,094 units, bringing the group's eight-month volume to 317,693 units, up 32 percent. (Click on Russia sales PDF, above right)

    Lada vehicles claimed the top four spots on the top 10 sales list both for August and the year to date, as well as the No. 8 spot for the eight months.

    With the latest monthly gain, Lada's market share for the year to date increases by 3.5 points over the 2009 period, to a commanding 28 percent.

    Among the biggest import manufacturers—those with eight-month sales above 20,000 units—Volkswagen, Kia, Renault, Toyota, Hyundai, Daewoo and PSA/Peugeot-Citroen are ahead for the year. But General Motors, Ford, Nissan and Mitsubishi declined for the period, even though each posted strong gains for August.

    Buyers continued to show a big appetite for Korean brands in August, putting two Daewoo cars and two Kias on the top 10 sales list for the month. Kia sales rose 92 percent over August 2009 to 11,007 units, again making it the import sales leader for the month. The Kia Cee'd and Rio ranked No. 8 and No. 10 on the August top-10 sales leaders list. (Click on Russia Top 10 table, above right)

    With the August gain, Kia moved closer to overtaking GM's Chevrolet brand as the Russian market's import sales leader for the year. Kia is up 62 percent for the first eight months to 67,238 units, while Chevrolet is off 5 percent to 70,034.

    Chevrolet was Russia's top-selling foreign brand in 2009 while Kia finished fifth.

    Hyundai was up 58 percent in August while Daewoo more than doubled its year-earlier volume, rising 104 percent.

    CA71011914.PDF

    Russia vehicle sales, Aug. & 8 mos.

    CA71011914.PDF >
    CA71012914.PDF

    Top 10 sellers in Russia

    CA71012914.PDF >
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