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bne November 2018 Companies & Markets I 15
Russia's car sales slow down in September, but demand strong ahead of VAT hike
IntelliNews Pro
Sales of cars and light commercial vehicles (LCVs) in Russia increased by 6.2% year-on-year in September and by 14.9% y/y for January-September 2018 to 0.157mn units and 1.3mn units, respectively, according to the latest data by the Association of European Businesses (AEB).
The growth rate of the car market slid into the two-digit zone, as 2018 marks the second year of market recovery exhaust- ing the base effect. But the front-loaded purchases of cars are expected to continue until the end of the year, with consum- ers avoiding higher prices on weaker ruble and VAT hike.
"Total market sales in September continue to show positive momentum, on the backdrop of a strong performance in the same period of the previous year," the head of AEB Joerg Schreiber commented.
The AEB even revised the sales forecast upward to 1.8mn units in 2018 or 13% y/y growth "in view of the current market conditions, and the expected VAT increase from January next."
Previously VTB Capital expected 11% y/y market growth, expect- ing the sales growth rate to slow down somewhat due to price increases and the less favourable base effect, "although the VAT increase from 2019 might support demand at the end of the year."
A drop in demand in 2019 could be avoided due to continuous government support. The Russian government will spend RUB10bn ($143mn) on supporting car demand in 2019,
Tass reported on September 15 citing the Minister of Industry and Trade Denis Manturov, without providing further details.
Previously in July the Russian government extended the programme of car sector support until 2020, providing RUB15bn ($240mn) worth of state financing for discounted leasing for an annual 45,000 car sales.
“A drop in demand in 2019 could be avoided due to the continuous government support”
Discounted loans for consumers on the car market and "cash for clunkers" utilisation programmes helped the domestic car market recover in 2017 and 2018 after four years of decline. The performance of the top seller on the Russian market Avtovaz carmaker and its Lada model has been supported
by state initiatives.
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