The Russian car market will stagnate in 2022

Sales of new passenger cars and light commercial vehicles (LCV) in Russia in 2021 amounted to 1.67 million cars, said on January 13, 2022 at the annual press conference of the European Business Association (AEB) the head of the committee of automakers Thomas Sterzel. This is 4.3% more than in 2020, but 5.1% less than in 2019. In the last precoronavirus year, 1.76 million new cars and LCVs were sold on the domestic market.

Lockdown in the spring of 2020 largely determined the trends of the market during 2021, admitted Sturzel in his presentation. According to him, the delayed demand then contributed to the rapid recovery of the market during the first eight months of 2021. But then the global decline in production, shortage of microchips, logistics problems and other negative trends led to a significant reduction in supply. The car market was not able to fully realize the existing growth potential, said Sturzel. This can be seen in the forecasts given by the AEB in mid-2021. At the time, the association predicted that car sales could grow by 9.8% over the year, recovering to 2019 levels.

December 2021 was a particularly unpleasant surprise for the market. The month, traditionally considered favorable for sales, this time showed a failure of 20% in annual terms, according to AEB statistics. In December, 133,470 new cars and LCVs were sold in Russia.

Of the top five market leaders, only Toyota was able to increase sales in December 2021 by 13% to 10,369 cars. Sales of AvtoVAZ fell by 27% to 29,919 vehicles, Kia – by 22% to 15,531 units. Renault showed a decrease of 1% to 12,049 units, and Hyundai failed more than twice – to 7,591 cars.

Sergei Udalov, executive director of Avtostat, cites the high base in December 2020 as the reason for the particularly sharp decline.

In 2021, large automakers still saw a small increase in sales compared to 2020. AvtoVAZ was able to increase sales of cars by 2% to 350,714 units, Kia – also by 2% to 205,801 cars, sales growth of Hyundai amounted to 3% to 167,331 units, Renault – also 2% to 131,552 units. Sales of Toyota cars rose by 7% to 97,941 units.

Traditionally, sales of Chinese brands have grown sharply, which better than other automakers cope with the lack of microelectronic components (“Vedomosti” spoke in detail about this phenomenon on December 6 and 7, 2021). Haval showed sales growth of 125% to 39,125 cars, Chery – by 224% to 37,118 units, Geely – by 59% to 24,587 cars. The leader among Chinese brands in Russia – Haval (Great Wall Motor brand) for the year moved from 16th to 12th place in sales.

Among other trends in the 2021 car market, AEB notes a continued decline in the share of the C-segment, otherwise known as the “golf class” from 14.78% to 14%, and the growth of the crossover segment and SUV (SUV – sport utility vehicle).

The association also noted a stable demand for commercial vehicles. “The LCV market has shown better dynamics compared to the car market as a whole. A slight decrease in sales compared to last year was observed only in the fourth quarter, “says Sterzel. In 2021, 130,691 LCVs were sold, which is 17% more than in 2020, according to AEB data. The market leader remained the Russian Gazelle from the GAZ Group (47,032 cars), in second place with more than twice the lag of Ford Transit (20,840), the third line in the family of classic cars UAZ (11,884 units).

Another trend in 2021 was the growth of sales of electric vehicles, which, however, still remain at the level of statistical error against the background of the entire market. AEB for the first time began to provide statistics on electric cars in 2021 in Russia and counted 1001 such cars. This is 2.6 times more than in 2020.

The electric car segment showed rapid growth in the first three quarters due to the application of a zero import duty rate, Sterzel said. This preferential regime expired in 2021, and since the EEU countries have not been able to agree on its extension (Russia was against), from January 1, 2022, electric cars are imported under the general rules with a duty rate of 15%. This will slow down the development of electric charging infrastructure and demand for this type of vehicle, the AEB believes.

According to the results of 2021, more than 1.5 million cars of all kinds were produced in Russia, the head of the Ministry of Industry and Trade of the Russian Federation Denis Manturov told journalists on January 12. This is 10% more than in 2020, when 1.4 million cars were produced. These departments are based on preliminary calculations of JSC “Electronic Passport”, which is the administrator of the system of electronic passports of vehicles (EPTS) in Russia. But they began to be issued instead of paper TCPs only in November 2020, so the data for comparison with 2019, the “Electronic Passport” does not have.

In 2019, Rosstat recorded almost 1.7 million cars manufactured in Russia. This value includes cars, trucks and buses of different weights. It is 12% more than the volume that Manturov brings in 2021.

The AEB Committee of Automakers expects a small market growth of 3.3% in 2022 to 1.722 million cars and LCVs, said Sterzel. He predicts that the main negative factors – problems with microchips, reduced production, disruption of supply chains – will not be eliminated for most of 2022. The share of imports will continue to decline. The association assumes that the geopolitical situation will not worsen and new sanctions on foreign trade activities against Russia will not be adopted.

“Since 2015, the Russian car market has remained fairly stable and is in the range of 1.4 to 1.8 million cars. There are no signs of a rapid improvement in the situation, “said Sterzel.

Among the topical issues for the industry in 2022, Sterzel noted the need to raise the threshold of “luxury tax” for cars. Now it applies to cars more expensive than 3 million rubles. in the form of an increasing coefficient of the transport tax. But prices for new cars jumped by a quarter last year, not counting dealer surcharges, Avtostat reported. As a result, many cars that do not really belong to the luxury category have fallen under this tax.

Udalov from Avtostat agreed with him, noting that the main factor influencing the market in 2022 will be the shortage of microelectronics. According to him, this problem can be resolved no earlier than the second half of the year. The basic forecast of the agency for 2022 assumes a decrease in sales of new cars by 3% compared to 2021. An optimistic forecast assumes a growth of the car market by 5%, and a pessimistic – a decrease of 11%.

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