MOSCOW -- Russia's car market could grow by up to 12 percent this year, recovering faster than previously expected thanks to the improving economy, the head of Kia Motors' Russian business said.
Alexander Moynov said Kia had previously seen Russian car sales growing 5-7 percent this year, but now expects them to reach between 1.57 million and 1.6 million vehicles, compared with the 1.43 million sold last year.
Russia's once-booming auto market became one of the most high-profile victims of a steep economic downturn in the last two years, with sales halving from a peak of almost 3 million a year in 2012.
But the industry's prospects have brightened this year on the back of a nascent economic recovery and Moynov said the Association of European Businesses (AEB) industry group would also lift its 2017 sales forecast in October to around 1.57 million vehicles. The AEB forecast 1.48 million in January. Kia is a member of the AEB's automobile committee.
Speaking at the Reuters Russia Investment Summit on Friday, Moynov said market growth was expected to continue in 2018, with sales forecast at up to 1.8 million vehicles.
"We think there will be a positive dynamic in macro-economic factors which will have an impact on consumer incomes," he said at the summit, held at the Reuters office in Moscow.
"We also hope financing will develop as it is now returning as one of the important drivers, and we hope that state support will be maintained next year."
Kia and its affiliate Hyundai Motor focused on low prices to boost market share during the downturn, successfully plying their cheap but reliable cars to increasingly cash-conscious Russians.
Kia accounted for 11.9 percent of Russian car sales in January-August this year, according to AEB data, up from 10.4 percent in the same period last year. Kia is the No. 2 brand in the market after Lada.
"We have set ourselves the goal of increasing market share ... All decisions are directed towards this strategy," Moynov said. "If we manage 12 percent market share (by the end of the year), that is good."
Moynov said lower lending rates had helped support sales this year, with 45-50 percent of car purchases now made on credit and pent-up demand seen at around 3 million consumers.
The Russian central bank cut its key rate to 8.5 percent last week, down from 10 percent at the beginning of the year.
"We currently see a positive dynamic in this market. The share of sales on credit is increasing for all car producers," he said. "Credit is cheaper, and possibly people have had enough of waiting and finally come to the market but don't have enough money to buy in cash."