Russia becomes second largest vehicle market in Europe

Sales of 2.85 million units expected in 2012



Vehicle production and sales in Russia

Share of new car and LCV market in Russia

 The vehicle sales in Russia increased in 2011 to 2.65 million units, up 38.7% from the previous year. The market has now become the second largest in Europe after Germany. Robust consumer spending supported by expanded export of crude and other resources has buoyed the sales.

 In 2012, steady growth has been continuing, with slightly reduced growth rates. The vehicle sales in full 2012 are expected to reach 2.85 million units, up 7.4% y/y. The production volume has been fairly expanding as well with 1.99 million units in 2011, up 41.8% y/y. The volume in full 2012 is forecast to increase by 11.3% y/y to 2.22 million units.

 As for the market share by manufacturer, AvtoVAZ that held 27% in 2010 has gradually been reducing it to 19% in January-October, 2012. Foreign OEMs including Hyundai and VW, on the other hand, are expanding shares.

 Russia has formally entered the WTO in August 2012. Auto industry officials pointed out concerns over impact of lowered import tariffs as a result of the entry. In September 2012, the Russian government newly introduced a recycling tax on vehicles. Since the tax rates are set higher on imported and used cars, it is regarded as a measure to protect the domestic auto industry from lower tariffs after Russia's WTO accession.

 In order to address the expanding Russian market, many foreign OEMs are teaming up with local OEMs to strengthen their local production. The Renault-Nissan Alliance will acquire a majority stake in AvtoVAZ and expand the partnership to raise the combined production capacity of the three OEMs to 1.6 million units per year. GM will boost capacity both at its independent plant and the GM-AvtoVAZ JV plant. Mazda will increase capacity at its JV plant with Sollers. Fiat will partner with Russia's largest state bank Sberbank to build a plant to produce Jeep brand vehicles.

Note: Sales volumes of passenger cars and light commercial vehicles by OEM are listed at the end of this report.