Page 88 - RUSRptSept18

9.1.2 Automotive sector news
Sales of cars and light commercial vehicles (LCVs) in Russia increased by 10.6% year-on-year to 0.143mn units in July and by 17% y/y in January-July 2018 overall to 0.99mn units, according to August 6 report by AEB Automobile Manufacturers Committee. Previously in June 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. But the confident recovery on the market continues. "No fundamental change in July - market sales continue to recover at a comfortable double-digit pace, for the 15th consecutive month now," commented AEB's head Joerg Schreiber.
"Main driver of growth remains the continuous positive trend in consumer confidence , encouraging customers to finally exchange their older car for a new one,” he argued. Nevertheless, previously in May analysts warned of possible price risks on the car market. VTB Capital argued that recent weakening of the ruble "might have pulled forward some future demand amid concerns of potential price increases."
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 believed 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.
AvtoVAZ, with its Lada brand, remained the market leader with a 20.5% share in July and 20.1% in 7mo18. The company's sales increased 11% y/y to 29,389 units in June and are up 20% y/y to 199,273 units YTD. Meanwhile, AvtoVAZ-Renault-Nissan Group, represented by the Lada, Renault, Nissan, Infinity and Datsun brands, accounted for about a third of the market.
88 RUSSIA Country Report September 2018 www.intellinews.com