Thailand, Indonesia, and Malaysia will account for around 93%, or 3.99 million units, of total light-vehicle produc… https://t.co/P0RW1uYdrW
Light-vehicle sales surge 24.7% in Russia during February as recovery accelerates
The Russian light-vehicle market enjoyed another very good month in February as it almost matched January's highly accelerated growth rate.
IHS Markit perspective
- Implications: The Russian light-vehicle market posted an accelerated 24.7% year-on-year (y/y) increase to 133,177 units during February.
- Outlook: February's figure almost matches the highly accelerated growth rate recorded in January. The combined increase for January–February was 27.5% y/y to 235,641 units.
The Russian light-vehicle market posted another accelerated increase during February, with sales up 24.7% year on year (y/y) during the month to 133,177 units. The growth rate was down slightly from that witnessed in January, with the combined rise for the first two months of the year standing at 27.5% y/y to 235,641 units, according to the latest data released by the Association of European Businesses (AEB). Commenting on the market performance at the start of the year, the head of the AEB's vehicle manufacturers' committee, Joerg Schreiber, said, "Russian car market sales continue to demonstrate healthy momentum in February, extending the string of uninterrupted year-on-year growth to a robust 12-month period. Over 27% improvement in the first 2 months [is] an impressive turnaround for [the] market, which was battered with bad news until just one year ago. Moving forward, [the] market outlook remains positive but it is reasonable to expect that the pace of year-on-year recovery should slow down as a result of the growing base effect applying from March last year."
Russia's leading car brand, Lada, is really beginning to reap the benefits of the investment that has been made in it by new owner Renault in recent years at the start of 2018. In February, the brand significantly outpaced the overall market with a 37.0% y/y increase in sales to 27,401 units, which was up slightly from the growth rate it generated in January. This meant that Lada's combined sales in the first two months of 2018 were up 33.0% y/y to 48,406 units. The new Kia Rio maintained its position as the best-selling car in Russia during February, but the Lada brand occupied second position with the Vesta, whose sales rose by 3,355 units in comparison to the equivalent period last year to 8,456 units as this model really starts to gain traction and bring customers back to the Lada brand. It was only just under 500 units behind the Rio in the sales table. The Granta also performed creditably, adding just over 1,600 units during the month to post sales of 6,861 units, leaving it third in February's best-selling car chart. The Rio also just beat the Vesta in the year-to-date (YTD) rankings.
Kia was the second best-selling brand overall in February, as is usually the case these days, its sales in the month rising by a very strong 44.0% y/y to 17,795 units, up from 12,390 units in February 2017. This helped propel YTD growth to 46% y/y to 33,105 units. As well as the Rio, the Kia brand's sales were helped by strong sales momentum for the Sportage, which added just under 1,000 units in February to score a monthly sales volume of 2,469 units. Kia is looking very strong in the Russian market at the moment and sales momentum is likely to build as the Stonic SUV-B model is rolled out, although it remains to be seen if the pricing of this vehicle will allow it to challenge the Renault Duster and Kaptur models and the Hyundai Creta.
Hyundai enjoyed similarly strong sales growth of 43.0% y/y during the month to 13,434 units, with sales of the aforementioned Creta and market stalwart Solaris developing well. The Creta was the fourth best-seller overall in February, with a 1,882-unit rise to 5,937 units, while the Solaris also added significantly to its February 2017 tally with a 1,519-unit increase to 4,600 units, making it the fifth best-seller during the month. In overall terms, Hyundai's sales rose by 38.0% y/y to 22,186 units last month.
Renault was in fourth spot during February but posted a less spectacular increase than its rivals with a 17.0% y/y rise to 11,268 units, which was a marked slowdown on its January growth rate. Its YTD sales are up 29.0% y/y at 19,148 units. Volkswagen and Toyota posted even weaker growth last month. The former recorded an 11.0% y/y rise to 7,070 units, while its YTD sales are up 16.0% y/y at 12,663 units. Toyota's sales meanwhile crept up by 3.0% y/y, significantly underperforming the overall market, with Camry and RAV4 sales remaining almost entirely static during the month.
Outlook and implications
The accelerated increase in Russian light-vehicle sales is welcome news for stakeholders in the market, and it looks as though the strategy of foreign OEMs such as Renault, Hyundai, and Volkswagen to remain steadfastly committed to the market throughout the extremely tough environment witnessed in 2015 and 2016 is starting to be vindicated. However, the short-term picture remains slightly uncertain and growth rates are likely to moderate in the second half of the year against a higher base level. One of the main questions about the short-term development of the Russian light-vehicle market is what kind of stimulus programmes, if any, will be put in place in 2018. There have been various programmes in place since the end of 2015 to stimulate vehicle sales. As things currently stand, the scrappage stimulus ended in 2017 and there is no current information about a possible extension in 2018. According to our assumptions, there will be no such incentive in 2018, but the "First Car" and "Family Car" programmes are likely to be extended. These stimulate demand from consumers who would otherwise not be able to buy a new car. These schemes give a 10% discount to an individual who is buying his or her first car (First Car) or who has two or more children (Family Car). Eligible customers also receive preferential financing rates and conditions for the vehicle purchase.
In terms of wider macro indicators, Russian real GDP increased only 1.5% y/y in 2017, undermined by the contracting performance of industrial output. Increased government spending should lift growth to 2.0% in 2018, but the expiry of the one-off measures will slow full-year gains to 1.8% and 1.9% in 2019 and 2020, respectively. The 2018 real GDP growth rate is expected to benefit from increased social spending and firming private consumption, coupled with the one-off positive impact from investment and services exports related to the hosting of the football World Cup. Annual inflation will accelerate only moderately, helped by firmer consumer spending and commodities' price gains. Still, inflation will remain within the 4% target range set by the Central Bank of Russia, allowing room for further monetary easing throughout 2018. For the full year 2018, IHS Markit forecasts that Russian light-vehicle sales will rise from 1.59 million units in 2017 to 1.85 million units.
About this article
The above article is from AutoIntelligence Daily by IHS Markit. AutoIntelligence Daily provides same-day analysis of automotive news, events and trends. Get a free trial.
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