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Russian Car Market Passes Germany as Europe's Biggest (Update1)
By Paul Abelsky
July 9 (Bloomberg) -- Russia surpassed Germany as Europe's biggest auto market in the first half as sales rose 41 percent to 1.65 million cars, swollen by demand for models from U.S. and Asian manufacturers, PricewaterhouseCoopers LLP said.
Spending on autos increased 64 percent to a record $33.8 billion, buoyed by $27 billion in sales of foreign makes led by General Motors Corp.'s Chevrolet unit and Hyundai Motor Co. of Korea, the accounting firm said today in an e-mailed report.
Russia is becoming Europe's top car market earlier than forecast by manufacturers as a 10th straight year of growth in the country's oil-based economy coincides with declining auto sales further west. Renault SA Chief Executive Officer Carlos Ghosn said Jan. 30 that Russia would overtake Germany within two years, while Ford Motor Co. European chief John Fleming said June 7 it might do so in 2009.
``Sales will carry on growing at this pace for two or three years as rising incomes fuel demand,'' said Mikhail Pak, an automotive analyst at IFC Metropol in Moscow. ``Government spending on improving transport infrastructure will also be an important factor in stimulating demand for cars.''
Russian auto sales are likely to reach 3.8 million this year if the present level of growth is sustained, PwC said. German deliveries may total 3.2 million, according to estimates from the country's VDA trade association published on July 2.
``Russia may become Europe's biggest market in 2008 after surpassing Germany in the six months,'' PwC partner Stanley Root said in the report, citing VDA figures showing sales in Europe's biggest economy rose 4 percent to 1.63 million in the half.
Imports Surge
Russian car imports jumped 54 percent to 785,000 in the six months, almost half of total sales, and purchases of locally made foreign cars rose 41 percent to 290,000, PwC said. Chevrolet was most popular, with sales reaching 103,735.
Nine of the top 10 overseas carmakers in Russia are American or Asian, according to the PwC report. GM sells Chevrolet's Lanos and Aveo sedans and Lacetti compacts there, together with the Opel Astra, and aims to open an assembly plant near St. Petersburg in November to boost production.
Hyundai, based in Seoul, ranks second with sales of its Accent small car and Getz hatchback. Ford is placed third, with the Focus and Fusion sedans.
New Capacity
At least 10 foreign automakers have factories or joint ventures in Russia and production is being expanded monthly. PSA Peugeot Citroen of France, Europe's second-biggest car company after Volkswagen AG, last month began work with Mitsubishi Motors Corp. of Japan on a 470 million-euro ($732 million) plant near Moscow to supply sport-utility vehicles and mid-sized cars. Toyota Motor Corp., the world's No. 2 after GM, opened a Camry sedan assembly line near St. Petersburg last December.
Russia will account for 20 percent of global growth in car sales through 2015, according to the PwC report, which cites data from the accountant's own study, Russia's statistics and customs offices and Moscow-based consultant ASM.
PwC's figures include sales of cars made in Russia by local manufacturers, cars made in Russia by foreign companies, new cars made overseas and then imported to Russia and used foreign cars imported to Russia.
To contact the reporter on this story: Paul Abelsky in St. Petersburg at pabelsky@bloomberg.net
Last Updated: July 9, 2008 07:55 EDT
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