Russians in hurry to buy new cars despite price hike
Although this year has brought Russians a noticeable fall in living standards and concerns about their wages and jobs, interest in new cars increased in September. People are rushing to make big purchases ahead of further price growth.
The crash in the value of the Russian ruble has pushed prices for some new cars up by 15% this year, reports The Moscow Times. According to market insiders, the trend is likely to continue through 2021. The ruble has lost 25% against the US dollar and more than 31% against the euro since the beginning of the year due to a slump in oil prices as a result of the coronavirus pandemic combined with geopolitical risks.
While new car prices have increased by 3-15% depending on brand and model, the fastest rise has been shown by imported automobiles or those with a high component of materials from abroad. Dealers say that prices for Jeep, BMW, Audi, Volvo and Mercedes have risen by more than 10% since the beginning of the year. Prices for Russian car brands have also risen by 7% since January. Lada, which remains the most popular new car brand in the country, accounts for more than 20% of the purchases. According to Russia’s largest car dealer Rolf, prices are still expected to rise, as manufacturers tried to keep them down for fear of spooking new customers. Now buyers are bringing forward their purchases and thus creating a mini-boom in demand to avoid being hit by higher prices down the road.
Economists have historically seen dynamics in the automobile industry as a bellwether for the wider economy, says The Moscow Times. Such big-ticket purchases as new cars involve a wide range of factors including consumer confidence, financing conditions, exchange rates and household spending power.
In September, sales of new cars added 3,4% compared to the same month of 2019, read statistics from the Automobile Manufacturers Committee of the Association of European Business (AEB). The growth was registered amid a noticeable fall in living standards and unprecedented uncertainty over wages and jobs. “September sales were supported by pulling forward demand due to concerns about price increases amid the recent ruble depreciation,” commented VTB Capital’s analyst Vladimir Bespalov.
Chairman of the AEB committee Thomas Staertzel agreed that pandemic-related border closures, which prevented households from taking their traditional summer holidays, had stimulated demand. Analysts estimated that Russians could have kept extra $33 billion that would typically have been spent abroad over the summer this year.
Nonetheless, sales of new cars are still down 13,9% this year. The AEB expects to end 2020 with a decline of 13,5% year on year.