Russia – s car market will be Europe – s thickest by 2020, forecaster says
Russia’s car market will be Europe’s thickest by 2020, forecaster says
MOSCOW — The Russian auto market will overcome its current slump and overtake Germany to become the largest in Europe – and the fifth largest globally – by two thousand twenty as car ownership increases, a Boston Consulting Group explore said.
Western carmakers including General Motors, Volkswagen, Ford Motor and Renault have invested powerfully in Russia on expectations that the market will grow as a rising middle class buy cars for the very first time or upgrade aging models.
The examine predicts that Russia can go after Brazil and China in converting itself from a market targeted by foreign exporters, to one with a superior share of locally-produced vehicles.
Boston Consulting forecasts that Russia’s auto market will grow by an average annual rate of six percent through 2020, when it will reach annual sales volume of Four.Four million, up from Two.9 million in 2012.
That would make it the fifth largest in the world by sales, after China, the United States, India and Brazil. Last year, Russia ranked seventh in the world after China, the U.S, Japan, Brazil, Germany and India. In two thousand nine it was tenth largest.
However, Boston Consulting warned that that Russia still needs to overcome serious hurdles, including volatility in request, a powerless supplier base and high logistics.
Probe co-author Nikolaus Lang, said annual vehicle sales in Russia will grow if the government creates a stable market environment and “if the industry professionalizes along the entire value chain, from developing cars to producing components to manufacturing the cars and selling them.”
Russia was on course to become Europe’s largest market before the two thousand eight financial crisis hit request and the availability of credit.
Boston Consulting’s forecast for Russia is a bullish prognosis compared with latest figures from the Association of European Business (AEB), which tracks the Russian car market. Data from the AEB showcased car sales have fallen for four straight months as Russia’s $Two.1 trillion economy falters.
The AEB recently cut its full-year sales forecast to Two.8 million units, which would be a fall of five percent, but said it expects government plans to subsidize credit-backed vehicle purchases will boost sales for the remainder of the year.
Boston Consulting said its prediction takes into account the current weakening of the market. Lang said Russia’s underlying strengths remain, including strong request stemming from low car-ownership, good access to car finance and a readiness of local entrepreneurs to open car dealerships.
The investigate said both local and international carmakers were expanding, calculating total production capacity would rise to about Three.Three million vehicles per year by 2016, up from Two.Trio million in 2012.
But, in a sign that many of Russia’s less technologically advanced producers are fighting to rival, last year for the very first time more cars made by localized international producers were sold in Russia than either imports or domestic brands.
Feeble local suppliers remain a big issue compared with other developing markets such as China, Brazil and India, Lang told Automotive News Europe.
Automakers said they are able to work with just ten percent of Russian suppliers instantly, compared with eighty percent in Brazil and forty percent to fifty percent in China, Lang said.
Russian suppliers are typically puny scale and have inadequate quality levels for latest-generation vehicles. Only twenty percent of domestic parts manufacturers were likely to get through by 2016, the investigate said.
While Russia will remain a net importer of vehicles in 2020, exports will also increase, Boston Consulting forecast, as during downswings companies are likely to tap exports from Russia to send to other markets, mainly former Soviet bloc countries.
There are only two hundred ninety cars per 1,000 Russians versus five hundred sixty in western Europe and many of those vehicles are old, while a decade of strong growth driven by Russia’s mineral wealth is leisurely empowering a greater chunk of its population.
“Fundamentally it is an attractive market in terms of cars per thousand inhabitants and therefore we are bullish long-term – but that doesn’t mean that every year will be a good year,” said Ewald Kreid, a investigate co-author.
The explore projects that emerging markets overall will account for sixty five percent of global car sales in 2020, more than dual the twenty eight percent for which they accounted in 2000.
Reuters contributed to this report
Russia – s car market will be Europe – s thickest by 2020, forecaster says
Russia’s car market will be Europe’s fattest by 2020, forecaster says
MOSCOW — The Russian auto market will overcome its current slump and overtake Germany to become the largest in Europe – and the fifth fattest globally – by two thousand twenty as car ownership increases, a Boston Consulting Group investigate said.
Western carmakers including General Motors, Volkswagen, Ford Motor and Renault have invested strongly in Russia on expectations that the market will grow as a rising middle class buy cars for the very first time or upgrade aging models.
The investigate predicts that Russia can go after Brazil and China in converting itself from a market targeted by foreign exporters, to one with a superior share of locally-produced vehicles.
Boston Consulting forecasts that Russia’s auto market will grow by an average annual rate of six percent through 2020, when it will reach annual sales volume of Four.Four million, up from Two.9 million in 2012.
That would make it the fifth largest in the world by sales, after China, the United States, India and Brazil. Last year, Russia ranked seventh in the world after China, the U.S, Japan, Brazil, Germany and India. In two thousand nine it was tenth largest.
However, Boston Consulting warned that that Russia still needs to overcome serious hurdles, including volatility in request, a powerless supplier base and high logistics.
Investigate co-author Nikolaus Lang, said annual vehicle sales in Russia will grow if the government creates a stable market environment and “if the industry professionalizes along the entire value chain, from developing cars to producing components to manufacturing the cars and selling them.”
Russia was on course to become Europe’s fattest market before the two thousand eight financial crisis hit request and the availability of credit.
Boston Consulting’s forecast for Russia is a bullish prognosis compared with latest figures from the Association of European Business (AEB), which tracks the Russian car market. Data from the AEB displayed car sales have fallen for four straight months as Russia’s $Two.1 trillion economy falters.
The AEB recently cut its full-year sales forecast to Two.8 million units, which would be a fall of five percent, but said it expects government plans to subsidize credit-backed vehicle purchases will boost sales for the remainder of the year.
Boston Consulting said its prediction takes into account the current weakening of the market. Lang said Russia’s underlying strengths remain, including strong request stemming from low car-ownership, good access to car finance and a preparedness of local entrepreneurs to open car dealerships.
The probe said both local and international carmakers were expanding, calculating total production capacity would rise to about Three.Trio million vehicles per year by 2016, up from Two.Trio million in 2012.
But, in a sign that many of Russia’s less technologically advanced producers are fighting to contest, last year for the very first time more cars made by localized international producers were sold in Russia than either imports or domestic brands.
Powerless local suppliers remain a big issue compared with other developing markets such as China, Brazil and India, Lang told Automotive News Europe.
Automakers said they are able to work with just ten percent of Russian suppliers instantaneously, compared with eighty percent in Brazil and forty percent to fifty percent in China, Lang said.
Russian suppliers are typically puny scale and have inadequate quality levels for latest-generation vehicles. Only twenty percent of domestic parts manufacturers were likely to sustain by 2016, the examine said.
While Russia will remain a net importer of vehicles in 2020, exports will also increase, Boston Consulting forecast, as during downswings companies are likely to tap exports from Russia to send to other markets, mainly former Soviet bloc countries.
There are only two hundred ninety cars per 1,000 Russians versus five hundred sixty in western Europe and many of those vehicles are old, while a decade of strong growth driven by Russia’s mineral wealth is leisurely empowering a greater chunk of its population.
“Fundamentally it is an attractive market in terms of cars per thousand inhabitants and therefore we are bullish long-term – but that doesn’t mean that every year will be a good year,” said Ewald Kreid, a explore co-author.
The probe projects that emerging markets overall will account for sixty five percent of global car sales in 2020, more than dual the twenty eight percent for which they accounted in 2000.
Reuters contributed to this report