Russia's Battered Auto Market to Recover by 2015

pre-crisis levels by 2015, a report by an industry expert said Wednesday.

"In five years' time, the market should return to the level of sales of new cars in 2008," the report's author, Stanley Root, a partner at PriceWaterhouseCoopers, said.

Growth "is likely to be modest in 2010," the study found, saying that the industry faces an uncertain year due to fluctuating exchange and interest rates and questions over consumer confidence.

At worst, the market could fall by 5% in 2010, said Root, who specializes in the car industry at PwC's Moscow office. He gave an optimistic scenario that sales could increase by 15% to 1.3 million vehicles.

Car sales in 2009 plunged by 56% on the year to 1.4 million vehicles and the market's value fell by 61% to $26.8 billion, the report said.

The market sector of foreign brands that are assembled in Russia suffered less than the others, with sales falling by 38% to 360,000 vehicles, while Russian makers saw their sales fall by 44% to 390,000 vehicles.

OAO Avtovaz, which makes Ladas, saw its sales fall by 44%, while OAO Gaz Group, which makes Volga cars, saw its sales fall by 56%.

Imported cars were the worst-affected sector, with new car sales falling by 57% and sales of used cars plunging by 97%, chiefly due to the introduction of higher customs duty on Jan. 1, 2009.

Before the economic crisis hit in late 2008, the Russian car market was one of the fastest-growing in Europe and foreign carmakers flocked to set up production lines and retail networks in the country.

(Source: irco.biz)