A slowdown is expected in the shrinkage rate of the automobile market

A slowdown is expected in the shrinkage rate of the automobile market

Kommersant – The sales dynamics of passenger cars may improve significantly within the course of the remaining five months of the year, due to favourable macro-economic factors, as stated by experts from Sberbank Investment Research. According to their prediction, the market shrinkage will be around 6% in 2016, down from the 2015 rate of 44.9% published by Autostat Info. The experts say that the actual wages have increased by 1.4% in June and the 2015 levels have been maintained during the first half of the year. In addition, Sberbank Investment Research expects a slowdown in annual inflation to almost 6% during the second half of the year, which should stimulate the growth of actual wages and contribute to an increase in retail sales, according to a research. Stability in the ruble and a long-awaited reduction in the key interest rates by the Central Bank before the end of the year, making car loans more accessible, may provide further support.

The experts have also found intra-sectoral causes, triggering the increase demand. They expect the sales of Sollers to exceed the market average, due to the upgrade made in UAZ Patriot in October and the discounts made in the price of the 2015 model of the vehicle. The imports of Ssangyong will resume in November and Ford will launch a new range, formed of seven localised models from different segments of the market, as told by Sberbank Investment Research. According to Autostat Info, the registration figures of all Sollers brands (UAZ, SsangYong, Ford and Mazda 6 and Cx-5) were in market levels in July, falling by 15%, however, the experts explain the shrinkage in the LCV segment with the high-base effect, due to UAZ deliveries by Russian Post last July. According to Association of European Businesses (AEB) data, car and LCV sales have fallen by 16.6% in July, to 109,400 vehicles, the sales of UAZ shrinking sharply in particular, by 36% to 3300 units, Ford by 7% to 3300, SsangYong by 97% to 19 and Mazda by 18% to 1800 vehicles.

The prediction of Sberbank Investment Research is optimistic even by government standards, traditionally conducted by positive minded market experts. The minister of industry and commerce: Denis Manturov has predicted a 10% shrinkage in sales for the year (1.44 million vehicles), in July. The ministry doesn’t expect a market recovery before 2017. The optimism of Sberbank Investment Research is not shared throughout the market in general, however, most experts make their calculations in accordance with the shipments of cars to dealers. The analysts of the investment bank base their calculations on registrations, which is the institutionalised method of evaluating car markets in developed countries. These data exclude the grey exports, especially to Kazakhstan and Belarus last year, therefore, can not be distorted as a result of creative approaches by dealers to sales figures.

The director of EY Automotive Practice: Andrei Tomyshev believes that the expectations of Sberbank Investment Research may prove to be more realistic, taking into account a lower-base registration statistics effect. The decline in shipment terms (according to AEB data) was lower in 2015, by 36% to 1.6 million vehicles. Meanwhile, EY predicts a shrinkage between 13-17% in car sales (base forecast – 16%). The independent expert Sergei Litvinenko is of the opinion that the sales will shrink by 12-14%, by the end of the year. The managing partner of EURussiaPartners: Sergei Burgazliev doesn’t see any fundamental reasons for improvement at the moment and moreover expects a decline in car sales in the range of 14-18%, in the event of continuation of the current circumstances, highlighting the GDP and oil prices as the key factors in evaluating the situation.