Russia’s new car market, once forecast to overtake Germany and become the largest in Europe, is now in freefall. With sales plummeting by 14% in 2014 and expected to again record a double-digit decline in 2015, dealerships and automakers are struggling to innovate and are in talks with the government about support to be provided in the form of leasing subsidies and a “cash-for-clunkers” programme.
Taste for luxury not enough to avoid decline
Although new car sales in Russia declined in 2013 and 2014, sales of imported luxury automobiles were relatively resilient. Luxury car sales boomed in December 2014 as Russians rushed to convert cash into other assets and shield it from inflation, but, nevertheless, only accounted for well under a tenth of sales in volume terms.