Russian car market to gain momentum, says Frost & Sullivan
As expected, the European car market has been losing steam as cash-for-clunkers scrappage schemes wind down. Frost & Sullivan estimates that although four-month YTD figures in Europe remain positive (+4.8%), April numbers may be pointing to
the beginning of a negative trend for 2010, especially with scrappage schemes ending in large markets like France and Spain.
At the same time, the Russian economy is looking up, luring people back to the showrooms. 'The 20% jump in April is just what the Russian automotive industry needed after a depressing 2009,' said Frost & Sullivan research analyst, Vitaly Belskiy. 'However, it is too early to be overly optimistic. April 2009 figures were down by 53% down compared to 2008. In other words, the Russian light vehicle market is still leagues away from its potential – precisely, 44% away (April 2010 to April 2008).'
Frost & Sullivan says that even though scrappage schemes were introduced late and not properly coordinated in Russia, they are working there too. The big question now is what happens when government funds dry up. To some extent, the Russian car market will have to contend with the problems of Germany and Italy. If demand meets incentive funds, cars sold through the incentive will account for roughly 13% of the market.
'The light vehicle market in Russia will likely gain momentum later this year, reaching up to 1.6 million units, as the economy and consumer confidence improve,' stated Belskiy. 'Nevertheless, slumping European car sales, even in relatively strong CEE countries like Poland, indicate that new car markets remain highly volatile everywhere.'