MOSCOW - Russian car sales are expected to grow 12 percent next year, the Association of European Businesses (AEB) said, down from around 30 percent in 2011 but maintaining a recovery that should bring the market to the cusp of pre-crisis levels.
The AEB said it expects Russians to buy 2.8 million cars in 2012, compared with 2.9 million in 2008. It upgraded its forecast for 2011 to 2.55 million from 2.45 million.
"The indications are for continued growth but not at the rate seen in 2011 or 2010. We see a slowdown but not stagnation," said David Thomas, chairman of AEB's autos committee and the head of Volvo cars in Russia.
"There are lots of questions on the economic climate but they have been there since the summer and we are yet to see a slowdown in that time. For (Russian) consumer confidence it has so far been part of the background," he added.
Russia was on course to overtake Germany as Europe's biggest car market before the financial crisis, but a collapse in demand as credit dried up caused sales to halve in 2009.
A return to economic growth and a government-sponsored scrappage scheme delivered a steady market recovery in 2010 and 2011, while many industry company directors have long-predicted a return to pre-crisis sales levels of 2.9 million in 2012.
Carmakers including Ford, General Motors, Fiat and Renault are among the foreign players betting on fast growth in the Russian market to offset slowing sales in western Europe.
Executives at Renault, which owns 25 percent of state-controlled Lada-maker AvtoVAZ , and Ford have predicted the market could reach 4 million by mid-decade -- but that was before the euro zone debt crisis began to torment global markets.
"The forecast for 2012 is bullish -- it assumes that everything will be OK and economic growth will continue. If the oil price falls and the crisis is severe, growth could be anything from 0 to 10 percent," said Vladimir Bespalov, autos analyst at VTB Capital.
27% rise in October
The AEB upgrade was based on a 27 percent rise in October sales year-on-year, broadly in line with a 26 percent rise in September.
"The 27 percent increase for the month of October shows the stabilizing trend for the final quarter of 2011," Thomas said.
Sales of the Lada, which had a 34 percent market share in 2010, fell 3 percent year-on-year in October while foreign brands such as Renault rose. See PDF download above for Russian October sales by brand and group.
The Lada was the biggest beneficiary of the state scrappage scheme, which has now ended, while customers are waiting for the imminent launch its Granta model.
"The scrappage scheme is over so the cheapest cars are going down. Lada sales are unlikely to grow next year," Bespalov said.
Russian year-to-date sales came in at 2.16 million, up 43 percent from the same period in 2010 and above the 1.9 million sold in the whole of that year.
Source: Reuters; ANE staff