Russian automotive market: ‘Lada don’t live up to the expectations as well as Vesta, but…’

Lada loses popularity but it is still the leader

The production of AvtoVAZ (Tolyatti) was the most saleable in 2015. Last year 269,000 Lada vehicles were sold in Russia. However, the drop for a year made 31%. It allowed the closer pursuer, the Korean KIA, to approach the leader (163,000). Sales of KIA reduced by only 16%. There is another Korean that goes with KIA head-to-head – Hyundai. This producer demonstrated a less fall (10%) and sold almost the same quantity of cars (161,000).

These above-mentioned car manufacturers are followed by vehicle producers with a significate annual decline like Renault (-38%, 120,000 cars sold), Toyota (-39%, sales reduced to 98,000 cars).

According to the AEB, only five brands were at an advantage: Lexus, Datsun, Porsche, Brilliance, Smart. Photo: clubdatsun.ru

According to the AEB, only five brands were at an advantage: Lexus (6% growth, 20,000 cars), Datsun (even 178%, over 31,000) that entered the market only 2 years ago. Porsche showed a considerable growth – 12% (in 2015 it sold 600 cars more, compared to 2014 – 5290). Chinese Brilliance also achieved a growth by a quarter – to 1,200 cars, and Smart, which is a part of the German holding Daimler AG, reached 28% growth. Although the end result of small passenger cars is still not big – only 471 cars. UAZ practically doesn't have a reduction (-2%), while other car brands' fall in sales made 10%.

Gone GM brands and lost Ukrainian cars

The worst decrease was shown by the gone from the Russian market brands of GM: Opel (-74%, reduction from 65,000 to 17,000 cars) and Chevrolet (-60%, from 123,000 to 50,000 cars). The American producer of off-road vehicles and crossovers Jeep (-75%, to 2,000 cars), Japanese Honda (-78%, to 4,000 cars), Korean SsangYong (-79%, to 5,000 cars), Chinese Great Wall (-79%, to 3,000 cars).

The Spanish SEAT, which earlier was not very popular too, was the leader in reduction. The sales indicators of the manufacturer decreased by 97% — from 1641 to 47 cars. Besides, Chinese FAW and BYD (in 2014 from 2164 to 5 cars), the Ukrainian ZAZ and Bogdan (in 2014 from 481 to 92 cars), Taiwanese Luxgen, Russian TagAz and Izh sold no car.

The majority of the population of Russia still chooses Lada Granta. Photo: gazata.ru

From Granta to Rio

Last year's top of the popular makes of cars practically did not change. The majority of the population of Russia still chooses Lada Granta. 120,000 cars were bought for a year, but it is 32,000 cars less than in 2014.

Following these brands closely, Hyundai Solaris and KIA Rio still take their second and third places. Unlike Granta, 'the Koreans' even increased their sales. The budget sedan from Hyundai approached Granta – one year ago the difference was almost 40,000 cars. In comparison with the previous year, the Russians bought 1,000 cars of Hyundai Solaris more. KIA Rio, in turn, demonstrated a greater growth – by 3,500 cars (to 97,000 cars).

The fourth and fifth places go to Volkswagen Polo and Renault Duster. However, both makes have reduced their indicators. If last year Renault Duster took the fourth place and sold 76,000 cars, this year the result dropped to 44,000. Volkswagen Polo was in the sixth position and sold 59,000 cars, this year it fell to 45,000. Having reduced its indicators from 60,000 to 41,000 cars, Renault Logan lost its fifth place.

It should be noted that aside from Hyundai Solaris и KIA Rio, budget Skoda Rapid и Datsun on-DO also demonstrated growth. Their sales increased from 20,000 to 25,000 and from 11,000 to 24,000 respectively.

• Aleksander Chernov Deputy director general of KAN-Avto

  The fall in indicators affected all makes, and the mentioned figures approximately correspond to the reality: the fall made 35-40%. Lada probably has the greatest decrease. It is connected with a not good launch of Vesta we spent much money on. As for the makes traditionally produced by AvtoVaz, we don’t see any marketing support or any activity towards them. This is why the fall is about 45 per cent. Our situation is different, Tatarstan always supported VAZ because we have a lot of middle-income people, the middle class. Today the people who were going to buy a car don’t purchase it. So, there is a postponed demand due to the economic situation. And those people who want to buy a car, try to purchase cheap foreign-made cars like Rio, Solaris, which can be bought for a reasonable price. Client’s expectations concerning the economy are not always positive. Dollar aspires to 80 rubles, and prices for cars, which include a lot of components, will also augment. It is not possible to point out a specific period: volume of sales was reducing during the whole year and every month. We just worried about how to slow down this fall and make the client visit the shop and buy. Some brands managed to do it: ‘the Koreans’, ‘the Frenchmen’; I cannot comment other brands. the Situation is not good everywhere. We overcame the negative by means of the European, more advanced organization of work with clients. Client should always be delighted with everything: with the visit to the shop, purchase of a car, service, etc. When client is loyal, he or she will return or recommend us to someone. The expectation of the new year are even worse.

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  Yevgeniy Ushmayev Director general of Alliance-Avto

  I would raise the percentage, the fall in the market was more than 35%. Everything is developing on a decline curve, we had both ups and downs. The beginning of the year was good. We heard an echo of the boom in December – January, February, March, April, May – that was quite a difficult period. We sold a little, and people did not get used to the prices. From the summer they started to get accustomed to the current currency rate and prices. In the summer the results were not bad. Autumn brought reductions. In December the situation was a bit better, it was successful for us. November is always transitional: people wait for bargains, in this month demand decreases. I think that Mercedes is always saleable, at least in our shop. The disappearance of Mercedes and Volvo did not have an impact on this result. In my opinion, fall in sales was affected by the expansion of the range of models – appearance of Lada Vesta. Prices will grow in any case, moreover, in the short run. From February many brands will suddenly raise their prices. If the currency rate is not stable in the future, they will do it, which, in turn, will influence the purchasing power.

• Anna Matushevskaya Marketing director of auto holding Delfo.

  We confirm the data. Taking into account the fact that in December 2014 there were awful sales due to fluctuations of the currency rate, it is true. The third quarter of the year was not too bad. We link it with the situation when General Motors left the market and sold cars for good prices that allow to earn good money. Geely felt good, and Lada did not live up to the expectations as well as Vesta. We fulfilled the plan but expected something more. The very car manufacturers send forecasts for the market connected with the price for a petroleum barrel. As a forecast states, if a barrel costs $50, the market will be equal to last year’s state. And if it costs $30, the reduction is -20%. In my view, this is a real forecast. I think that in 2016 the reduction will be about 15-20%. We have commercial vehicles – small lorries, vans of such brands as Fiat, Isuzu, Hyundai. Commercial transport is like litmus paper of the state of the economy. When commercial transport is not sold, it means there is a stagnation. In these conditions Isuzu is fine because it has an automotive assembly plant in Russia. Despite the fact that it is a Japanese brand, the plant is situated in Ulyanovsk, and they can count on all state support programmes. Medium business is still able to buy them on the grounds that these programmes exist and Isuzu doesn’t depend on dollar and euro rates. On cargo transportation market everything is clear: American and European brands lost the maximal portion. Meanwhile, Korean, Japanese and Chinese brands feel good; if there is a plant in Russia – everything is great.

• Dmitry Konorov Head of Sales Department of R-Motors

  At present we deal with car sales of the brand FAW, so, I cannot say that there is a reduction of sales. We have been selling these cars for 2 months, and, according to the statistics for these 2 months, everything is fine. As for AvtoVAZ, the very Lada was excluded by the new Vesta. In this regard they have a small growth. If we look at the sales of the makes that were present on the market in 2014-2015, I think that there was a significant fall. Granta lost its positions probably because of the pricing strategies. If prices increase by 20-30%, people start to compare with other brands, and the direct rivals are foreign-made cars. It is natural that people prefer buying a car made abroad for the same price. As forecasts for 2016 demonstrate, even now the situation is unclear, so I cannot forecast or conclude. Prices are growing from the beginning of the year. And the first thing that influences the sales is pricing strategies. If it changes upwards, demand obviously drops. At the moment the tendency is bad.