It’s no secret that the global pandemic has not been kind to car sales anywhere, though Russia appears to be faring better than most. The country just recorded its third straight month of sales growth, Reuters reports, following a sharp decline of 50 percent to 70 percent early in the pandemic. However, there’s reason to believe the growth trend won’t last much longer.
November saw car sales in Russia increase by 5.9 percent, following jumps of 7 percent in October and 3.4 percent in September. Strangely, sales in western Europe continue to fall or at least break even. So why is Russia bouncing back when others aren’t?
It’s all down to a strongly depreciated ruble and Russian car buyers’ attempts to get as much out of their money before automakers raise prices in kind. As of late October, the ruble had plunged about 25 percent against the U.S. dollar and 31 percent against the euro in 2020, according to the Moscow Times. All the while, Russian President Vladimir Putin has advised the public not to be alarmed by the numbers.
Carmakers began raising their prices in the region earlier this fall, with foreign makes commanding up to 15 percent more on purchases. Russian brands like Lada have seen smaller hikes of about 7 percent, according to the Moscow Times.
Seeing the data, you might surmise that Russians are investing in personal transport while it’s cheap, with the true value of vehicles not yet fully reflected by the weak ruble. But this surely won’t go on forever, as VTB Capital analyst Vladimir Bespalov explained to Reuters:
The picture doesn’t look very optimistic from the point of view of consumer demand. People who had the money brought forward purchases, but there is still fairly major uncertainty in the economy and you’re not going to run out to the car dealership if things aren’t clear on the job and income front.
The expectation is that next quarter will see reduced enthusiasm for car purchases in Russia, as another round of price increases arrives and the market deals with the effects of consumers buying cars in the waning weeks of 2020 that they may have originally intended to purchase next year. Nothing like a good bout of economic strife driving the public to spend more now because it won’t be able to later.