MOSCOW, Feb 17 (Reuters) – Spending on new cars in Russia more than halved last year as the auto industry felt the full force of Western sanctions over the conflict in Ukraine, with production falling, prices rising and buyers switching to cheaper used models.
While analysts continue to debate the overall effectiveness of Russia’s economic curbs, there is no doubt that they have hit its auto industry, which was heavily dependent on foreign manufacturers and imported parts, hard.
Spending on new cars fell 52 percent to 1.5 trillion rubles ($20.4 billion) last year, while the number of new cars sold fell 58.8 percent. Car production also fell to its lowest level since the collapse of the Soviet Union in 1991, as Western carmakers halted production and sold factories.
Global spending on new and used passenger cars fell by more than 15% in 2022 as inflation pushed up prices and lowered living standards, data from analytics agency Autostat shows, despite a 14% increase in spending on used cars.
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That left used cars accounting for almost three-quarters of all cars sold, up from 55% in 2021, the data shows.
“Money flowed into the used car market as used car prices held steady, while at the same time the structure of the new car market changed significantly,” the adviser told Reuters Autostat delegate, Sergei Udalov.
“Budget Ladas and Chinese cars with prices of 2 million rubles and above remain, while premium brands have almost completely left,” he said.
Annual inflation of 11.9 percent last year contributed to an estimated 1 percent drop in Russians’ real disposable income, according to statistics agency Rosstat. Retailers have invested heavily in discount store formats, a trend that is being mirrored in the automotive sector.
Anton, an employee of a major Russian company who declined to give his last name, bought a used Skoda in December, preferring a Western-made car to a domestic or Chinese-made alternative.
At 2.5 million rubles, his Skoda was around 1 million rubles more expensive than it would have been a year earlier, but still 1 million rubles cheaper than a new version.
Anton said he felt lucky to have bought a used foreign-made car with low mileage, as stocks are running low.
“A new car now is only a bonus for rich people, unless it’s a Lada or a Chinese car,” he said.
According to Autostat, the average price of new cars sold last year increased by 17% to 2.33 million rubles, and used cars by 32% to 890,000 rubles.
Czech maker Skoda Auto, a unit of Volkswagen ( VOWG_p.DE ), said deliveries in Russia would fall 80 percent in 2022. Volkswagen has closed its Russian factories and halted imports, but has yet to agree to a sale like some of its peers.
France’s Renault ( RENA.PA ) sold its majority stake in Russia’s Avtovaz to the Russian state for just one ruble, but with a six-year option to buy it back. The same state buyer then bought the assets of Nissan ( 7201.T ) for one euro.
Imports of used cars rose last year, with those from Japan leading the way. Japan has curbed exports of high-value cars to Russia, but used cars imported by private individuals remain outside the restrictions.
The Western exodus has allowed Chinese brands to gobble up market share. In one high-profile case, China’s JAC engine parts are being used to revive the Soviet-era Moskvich.
Market analysts expect new car sales to rise to about 800,000 this year from 687,370 in 2022, but still well below the more than 1.6 million sold in 2021.
($1 = 73.5500 rubles)
Reporting by Gleb Stolyarov; Written by Alexander Marrow Editing by Mark Potter
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