Russian car market picks up speed
Car drivers around the world are feeling the pinch as the cost of petrol continues to rise. Despite this, Russia's auto market is constantly growing with sales of foreign cars up 47% in the first half of 2008.
As the cost of fuel rises across the globe, many vehicle markets are flagging. But the Russian market is experiencing its 6th consecutive year of growth. Ivan Bonchev, CIS Automotive Leader, at Ernst & Young, Moscow says Russia’s continued economic growth is a key reason.
So far we haven't really seen any direct effect on first of all the numbers of cars being in bought and secondly in the segmentation or classification of cars being bought. Russia in general has been benefiting from the higher oil prices from an economic perspective and this is also value for the auto industry.
Last year the market was estimated to be worth $54 billion dollars. PriceWaterhouseCoopers says its value in the first half of 2008 alone is $34 billion dollars. As Russia's car market continues to grow, congestion on streets in cities like Moscow only seems to be getting worse. And this is prompting calls for much-needed infrastructure development. Analysts say investment is crucial and that the government is allocating more funds for this purpose. Stanley Root, Partner, at PriceWaterhouseCoopers, Moscow, says its not just a matter of building roads.
There's lots of investment still to be put into traffic management within cities. It's not just a question of building roads. It's a question of managing the flow of traffic, managing the flow of intersections. It's a question of managing and investing in traffic management.
Projections of continued growth are prevalent in research being conducted by Ernst and Young and Pricewaterhouse. Data from the latter says that Russia will become the largest car market in Europe this year, with Ernst and Young saying it will happen next. Either way Russian drivers and car sellers seem likely to keep their foot to the floor for some time yet.
