BMI View: Despite the launching of a new car scrappage scheme over Q314, which has started to slow the rate of falling new vehicle sales year-on-year , BMI maintains its bearish view of Russian auto sales for 2014 and 2015 .
We believe that the scrappage scheme will yield unimpressive results owing to our downbeat private consumption outlook over 2014/2015. Private consumption will remain subdued at 2.8% in 2014 and 3.0% in 2015; far below the 5.5% and 6.3% growth seen in 2010 and 2011. In contrast to the accelerating growth in private sector lending from May 2010 to the end of 2011, credit growth has been slowing since H212 and is set to continue along this trend. As EU sanctions force Russian banks to tighten lending, growth in loans to businesses and private households will fall further, dampening consumer demand for big-ticket items including cars. Furthermore, we expect real wages to decline over the coming quarters owing to the depreciation of the rouble adding to import prices and the government's continued fiscal consolidation agenda which involves the reduction of pensions and public sector wages.
Secondly, the recent scrappage announcement offers fewer incentives than previously. Whereas the previous scrappage scheme was accompanied by a programme of subsidised credit provision for car buyers, the government's recent proposal is solely focused on scrappage. Given the worsening credit conditions over 2014 and 2015, subsidising the final price of the car will become less important to consumers than affordable loans. On top of this, the RUB40,000 discount in price offered by the new scheme is 20% less than the RUB50,000 offered in 2010/2011 rendering it less attractive than before. Thus, we believe this smaller reduction in the price tags of cars will not be enough to woo consumers worried about paying back higher interest car loans with their falling real wages.
That said, the most recent sales data (for October 2014) show that the scrappage...
The Russia Autos Report features the latest data and forecasts covering production, sales, imports and exports.
Business Monitor International (BMI)'s Russia Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the automotives market in Russia.
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BMI Industry View
Summary of BMI’s key industry forecasts and views, covering production, sales and the introduction of new technology or products.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the autos sector and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series and forecasts to end- 2019 for all key industry indicators (see list below), supported by explicit assumptions plus analysis of key downside risks to the main forecast, including:
Sales and production of motorcycles in units; total production of units; production by vehicle type (including cars, commercial vehicles, trucks and buses); total vehicle fleet size in units; sales by vehicle type, including passenger cars and commercial vehicles; fleet size by vehicle type, including passenger car, commercial vehicles and motorcycles; total vehicle trade balance in units; vehicle trade balance by vehicle type, including passenger car, commercial vehicle and motorcycle; car ownership measured as car density per 1,000 people.
BMI’s Autos Risk Reward Index
BMI’s Risk Reward Index provides investors (manufacturers, suppliers and dealers) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points. These provide indices of highest to lowest appeal to investors, with each indices explained.
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BMI forecasts to end-2019 for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
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