Page 18 - bne_newspaper_June_21_2019

Eastern Europe
June 21, 2019 www.intellinews.com I Page 18
Russian car market could be declining faster than data suggests
The Russian car market could be declining faster than the industry data suggests, with a real decline in car sales at 18% in May 2019 versus
the 7% decline reported by the AEB Automobile Manufacturers Committee, Kommersant daily sug- gested on June 18 citing the new car registry data.
Reportedly, the AEB statistics do not account for cars that have already been reflected in the sales records, but remain stored with dealers, as the financing of the sale is not actually finalised by the clients. The shares of such cars could amount to 50%, depending on the brand.
Kommersant sources claim that the car dealers report "on paper" sales as opposed to the actual amount as this could bring them to insolvency. Car sales are watched closely as an indicator of consumer demand and confidence, and worse sales could be an alarming sign amid declining disposable incomes.
According to AEB, the sales of new passenger cars and light commercial vehicles (LCVs) in Russia decreased by 6.7% in May 2019 to 0.138mn units. In January-May overall the market declined by 2.2% to 0.677mn vehicles.
Even according to this data, this made the second month in a row that car sales posted
a decline, with the negative market dynamic having previously promoted fears that the slow recovery in the car market might be running out of gas due to stagnant real income growth and bringing back the memories of the car market plunge in 2015-2016.
"No good news from the automotive market in May, instead a nearly 7% drop in sales volume — the most noticeable year-on-year loss in
over two years," the head of AEB Joerg Schreiber commented.
While "the extraordinary warm weather this year is not helping retail sales as many people spend more time than usual away from the big cities and their shopping malls," the "main reason of the current trend however remains a weaker retail demand, driven by macroeconomic factors such as rising household costs in the wake of the VAT increase earlier this year," Schreiber argued.
In addition, the automotive market is still digesting a substantial reduction in government subsidies stimulating retail purchases in the
past, creating "a rather challenging environment," the AEB wrote.
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