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21 Jul, 2009 12:36

Russian car market screeches to a halt

The Russian car market has fallen to a 5th place in Europe and is now behind Germany and France.

Car sales in Russia have dropped 55% in the past 6 month. They show no signs of recovery so far.

The slump is hitting across the spectrum with consultants Pricewaterhouse Coopers saying sales of Russian car brands dropped by half, sales of locally built foreign models are down 35 % in the 1st half of 2009 compared to last year, and with Russians almost completely abandoning the import of used foreign cars.

Stanley Root, Automotive analyst at PricewaterhouseCoopers, says downturn reflect three key factors which have created a perfect storm.

“It wasn’t just a question of falling demand, its also the devaluation of the Rouble second, and also the increase in bank interest rates. So you had three problems hitting all at the same time – a kind of perfect storm. It’s a market that was growing at 40% suddenly turned around. The conditions in Russia are pretty exclusive to the Russian market, which means the Russian market, temporarily has suffered probably more than other markets."