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NEWS
Sanctions hit Russian auto market
But 'bolshie' nation had hit an economic rough patch even before Ukrainian interventionRussia's automotive market could shrink by as much as 12 per cent in 2014, according to analyst PricewaterhouseCooopers (PwC).
As reported by Automotive News Europe, PwC is forecasting a drop somewhere between eight and 12 per cent for the Russian market – considerably more than the three per cent decline predicted back in January. Despite that, the market will still finish up at around 2.3 to 2.4 million vehicles sold, according to the report.
It's tempting to conflate the downturn in the market with sanctions imposed by the USA and other countries (Australia included), but the Russian economy had begun to weaken last year – when total sales of 2.6 million represented a 5.5 per cent dip. According to PwC, the slower sales in 2013 are linked to the country's support for separatists in eastern Ukraine, but the weakening currency – the ruble – has played a larger role.
Not only are imports more expensive since the ruble lost ground against other major currencies, many vehicles built domestically have come up in price too, due to their reliance on imported parts. Added to that is the higher cost of purchasing as finance interest rates have risen. Sergei Litvinenko, a senior spokesman at PwC's Russian office, expects the market to return to 2012 levels within the next two to three years, with growth of three to 3.5 per cent per annum after that recovery.
The news comes as media outlets report Russia has imposed counter-sanctions against the European Union, the USA, Australia, Canada and Norway. Imports of food from Australia have been banned for one year, potentially costing local farmers billions.
Russia has been one of the four emerging 'BRIC' economies targeted in recent years by car manufacturers for their growth potential – the other three markets being Brazil, India and China.
Picture courtesy SSE4/Wikimedia Commons
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Written byCarsales Staff
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