Russian automotive market slump continues; recovery not expected until 2017
GM to idle plant while other OEMs cut back production
Russian vehicle sales in 2014 fell 10.3% year-on-year (y/y) to 2.49 million units (excluding heavy-duty commercial vehicles) due to the stagnant economy caused by falling oil prices and Western sanctions over the Ukraine crisis. Although the Russian government has been supporting the automotive industry with new car purchase incentives, sales remain weak in early 2015. Association of European Businesses disclosed its forecast in January 2015 that vehicle sales for 2015 would decrease 24.1% y/y to 1.89 million units. As low oil prices and sanctions will persist for an extended period, prospects for Russian auto market are unclear. LMC Automotive forecasts that market recovery is expected beyond 2017.
Russian vehicle production in 2014 dropped 13.3% y/y to 1.89 million units. With a view that auto market recovery will take long, GM announced that it would idle its plant and scale down its operations in the country. On the other hand, many other manufacturers are dealing with the sluggish sales by significantly reducing their production.
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