Page 63 - RUSRptAug18

The pace of the Russia's car market recovery slowed as compared to previous months , attributed partly to the high comparison base and the ongoing FIFA World Cup in Russia.
"Sill, year-on-year improvement is a very respectable result," the chairman of AEB Joerg Schreiber commented, noting that "thanks to strong sales in the preceding months, vehicle inventories are rather lean across the industry, dampening sales growth if only temporarily."
AEB believes that "the first half of 2018 has been successful for the Russian car market, and there is good reason to believe that the positive momentum will continue in the coming months.”
Previously in May VTB Capital warned that recent weakening of the ruble "might have pulled forward some future demand amid concerns of potential price increases." The bank maintained the 2018 forecast of an 11% y/y increase in car sales, while admitting upside risk to this projection.
Price risks could intensify strongly, however, due to the recent decision of the government to hike the VAT rate , which has already paused the monetary easing cycle of the central bank and risks to slow the short-term GDP growth down .
Car dealers and market experts surveyed by Reuters on July 4 believe that VAT hike to 20% will be entirely passed on to consumers by car manufacturers who are only now start to profit from recovery after four years of market decline. It is estimated that prices for car buyers could rise by at least 2%.
Sources also told Reuters that most of the foreign car majors assembling in Russia have been running losses locally up until 2017 fighting for declining shares on RUB1.97 trillion ($31bn) car market.
As for per-company breakdown of June car sales, Russia's largest car maker Avtovaz increased its sales 15% y/y in June and 21% y/y in six months and remained the market leader with a 20%.
"Together with its shareholders Renault (#4 in June and 1H18) and Nissan (#7 in June and 1H18) it [Avtovaz] accounted for 34% of the market in June and 1H18," VTB Capital estimated on June 5. KIA was the second biggest group, with a 13% market share in both periods, followed by VW (the VW, Audi and Skoda brands) and Hyundai (Hyundai and Genesis).
Sollers car assembler managed to increase UAZ sales 10% y/y in June, which brought the January-June decline in UAZ sales to 5% y/y.
"Our forecasts imply that the UAZ sales trend might still improve somewhat in the coming months, but is likely to remain slightly down y/y for 2018," VTB commented, remaining cautious on Sollers shares with "no obvious triggers to drive the stock in the coming months."
Russian government extended the program of car sector support until 2020, providing RUB15bn ($240mn) worth of state financing for discounted leasing for an annual 0.045mn car sales. Discounted loans for consumers on the car market and "cash for clunkers" utilisation programme have helped domestic car market recover in 2017 and 2018 after four years of decline. The performance of top seller on Russian market Avtovaz carmaker and its Lada
63 RUSSIA Country Report August 2018 www.intellinews.com