Boston, MA -- (ReleaseWire) -- 06/19/2014 -- BMI has become increasingly bearish on the near-term outlook for domestic vehicle sales and production in Russia. A combination of sluggish demand for new cars and a deteriorating economic backdrop, coupled with increased tensions with the West following Russia's annexation of Crimea in March 2014, mean that we continue to target declines in both sales and production over 2014 .
Light vehicle sales in Russia declined 3.8% year-on-year (y-o-y) over the first four months of 2014, to 829,046 units, as ongoing weakness in the country's private consumption levels weighed on the segment. On the back of our expectation for a further deterioration in private consumption in the coming months, BMI is revising its forecasts to a 5% drop in the passenger car segment, from a 3% decline previously, and a 5.4% decline in light commercial vehicle (LCV) sales, from 2.4% previously. We expect total light vehicle sales to decline 5.1% in 2014.
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BMI expects to see ongoing erosion in private consumption throughout 2014 as inflation remains elevated, the currency weakens, unemployment creeps upward, real wages dip, and access to credit slows. These dynamics have weighed on sales over the year to date, as consumers remain reticent over big-ticket purchases such as new cars.
Moreover, we expect to see a more pronounced deceleration in private sector spending in the second half of the year, as capital outflows and political uncertainty weigh on fixed investment while elevated inflation erodes consumer purchasing power. These dynamics have informed our bearish light vehicle sales forecast revision for the year.
On the production side, despite the May 2014 announcement by Chinese autos manufacturer Great Wall Motor that it is to invest CNY2.1bn (USD337mn) in a vehicle production site in Tula Oblast, BMI remains bearish, forecasting a 4% decline in Russian passenger car production in 2014.
The majority of Russian autos output is for the domestic market, on the back of...
The Russia Autos Report features the latest data and forecasts covering production, sales, imports and exports.
Business Monitor International (BMI)'s Russia Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the automotives market in Russia.
- Benchmark BMI's independent automotives industry forecasts on Russia to test other views - a key input for successful budgetary and planning in the Russian automotives market.
- Target business opportunities and risks in the Russian automotives sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Russia.
- Assess the activities and market position of your competitors, partners and clients via our Competitive Landscape Analysis.
BMI Industry View
Summary of BMI's key industry forecasts and views, covering production, sales and the introduction of new technology or products.
Global, Regional and Country Industry Overviews
In-depth analysis of the major global and regional developments in the market, which can be linked with the country industry overview, providing cross-country investment, product and financing trends that will affect each market, supported by BMI?s global and regional industry forecasts.
Business Environment Ratings
BMI's proprietary Autos Business Environment Ratings are a unique country-comparative Risk-Reward Ratings index that separately analyses the risks and rewards of operating in each market. It is aimed at investors (including manufacturers, suppliers and dealers) who seek to either identify and compare market opportunities, or evaluate country-specific operational challenges.
The ratings methodology makes sophisticated use of over 40 industries, economic and demographic data points.
BMI Industry Forecasts
Historic data series and forecasts to end-2018 for all key industry indicators (see list below), supported by explicit assumptions, plus analysis of key downside risks to the main forecast, including:
Total production value (US$bn); total production of units; production by vehicle-type (including cars, commercial vehicles, trucks and buses); total sales value (US$bn); sales by vehicle-type, including passenger cars and commercial vehicles (vans and microbuses, pickups, trucks and buses, 4 wheel drive); total exports by value (US$bn) and by units; total imports by value (US$bn) and by units; contribution to GDP; employment in industry.
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