As US light vehicles sales topped 17 million in 2019 for the 5th consecutive year, Chris Hopson takes a look at the… https://t.co/YWcwD6o06a
Russian light-vehicle sales rise in November
The Russian light-vehicle market posted a strong result in November with a 10.1% year-on-year (y/y) rise to 167,494 units, according to the latest data from the Association of European Businesses (AEB). The increase was slightly down on the year-to-date (YTD) average; the market rose by 13.4% y/y in the first 11 months of the year to 1,625,531 units. The slower rate of increase than has been the case throughout the year was down to the higher base level comparison in the second half of 2017 as the market's recovery picked up pace. However, as the head of the AEB's vehicle manufacturing committee Joerg Schreiber pointed out, this result would have been weaker without January's forthcoming VAT rise. Schreiber said, "Total car market sales continue to demonstrate robust momentum in November. As commented on before, we can expect a similar strong performance in December, as customers are rushing to take advantage of year-end price deals including the still valid VAT rate".
Outlook and implications
The Russian market is maintaining its momentum towards the end of 2018 despite the higher base comparison that was generated as the market's recovery began to quicken in the second half of 2017. This is because the Russian government announced earlier in the year that there would be an increase in VAT from 18% to the level of 20% in order to fund capital expenditure. The overall economic picture is appearing better at the end of 2018 than it has for some years but still significant risks remain, especially regarding Russia's relationship with the rest of the world and the potential for additional sanctions. Real GDP growth in the full-year 2018 will benefit from increased oil production, private consumption supported by rising wages, and social payments and from the exports of services and infrastructure investment related to the recent World Cup. Economic activity is likely to average 1.6% in 2018 and 1.5% in 2019. The relatively weak performance reflects the negative impact of the April and August rounds of US sanctions, lack of economic growth-stimulating measures, including meaningful reforms, and still-uncertain external and domestic demand conditions. Private consumption is rebounding partly owing to the pent-up demand since 2014. However, the modest growth rate reflects the damage on household budgets of protracted decline in real disposable incomes, a modestly paced economic recovery, and the rouble's volatility. Consumers remain cautious, despite recent y/y gains in real wages and moderate unemployment of the economically active population. For the full-year light vehicle market forecast, IHS Markit sees sales rising from 1.60 million units in 2017 to 1.86 million units in 2018. The market will continue to rise healthily in 2019 to 2.17 million units, although there will inevitably be a draw back effect in sales to counterpoint the pull-forward at the end of the year as a result of January's VAT rise.
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