Page 86 - RusRPTJul19

9.1.2 Automotive sector news
The Russian government will resume the support for Russian car market
as of July 1 given declining demand and sales, Kommersant and Vedomosti dailies said on June 26. The automotive market is still digesting a substantial reduction in government subsidies stimulating retail purchases in the past, creating "a rather challenging environment," AEB wrote on the car sales declining by 7% in May. Reportedly new support mechanisms were requested by the largest carmakers such as AvtoVaz, Renault, GAZ, Sollers, Hiundai, and Kamaz, as well as by dealers associations. The state will grant a total of RUB19bn ($301mn) to support car leases and loans, for the programs First Car, Family Car, as well discounted leasing of commercial vehicles. The Ministry of Industry and Trade estimates that this would increase sales by an additional 75,000 vehicles in 2019.
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 suggested 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
86 RUSSIA Country Report July 2019 www.intellinews.com