Russians Sales Drop 79%
Credit by AutomotiveNewsEurope

The sales of Russian cars dropped up to 79% in April due to Sanctions that undercut the local production and most foreign automakers suspend operations – in times of President Vladimir Putin’s invasion of Ukraine.

Russians Sales Drop 79%
Credit by AutomotiveNewsEurope

The sales dropped up to 79% to 32,706 units of vehicles in April. This has been compared to last year sales based on the Association of European Business (AEB). Thus is the biggest sales drop since 2006 when European trade group started reporting the data. Based on April sales, BMW, General Motors or Mercedes Benz were not listed in the sales.

According to AEB data, AvtoVAZ built by the largest automaker dropped the sales up to 78%. An analyst, Promsvyazbank, said the contraction depth exceeded when the Covid-19 restrictions postponed the sales in April 2020.

Promsvyazbank said as the cars shortages at warehouses, the sales drop was increased by rising both the prices and prohibitive rates on the loans of cars.

War in Ukraine resulted sanctions that have shuffled the local car industry because of the dried-up parts supplies. This led to some forced shutdowns. Most automakers with production facilities in Russia such as Ford Motor, Mazda and Volkswagen Group have postponed work in the country. Meanwhile, other automakers stopped importing vehicles.

An intense economic which was dropped out of war in Ukraine was illustrated by the crash when Russia may face its deepest contraction in almost 3 periods.

This year, new car sales are expected to shrink by 50%. According to AEB last month after a 4.3% getting up in 2021. VTB Capital said, a decline of real incomes was unlikely recovered by the demand, leading the car industry to be the most affected sector.

The key rates were raised to 20% by the Russian Central Bank in the end of February. This is an emergency move taken to control financial risks days after Russia released “A special military operation” in Ukraine. Since then, the rate was trimmed back to 14%.

VTB Capital said, parallel imports would not help decrease the deficit because of the high costs. A list of goods from foreign makers was published by Moscow last week. Technology companies and consumer brands did the same as the government listed them in a parallel import. That is aimed to shield consumers from business isolation by the west.

A recent report by Moscow’s High School of Economics stated that imports made the car manufacturing dependent on them. Later, they predicted that more than a half of the added value in the sector comes from abroad.

Inventory management applied to create more efficient industries meant that the sanctions effect was nearly felt straightaway.

Due to the Russia-Ukraine war, the world’s automotive supply chains were fragile. The March light vehicle manufacturing update from S&P global mobility is seemingly decreasing the production in 2022 to 2.6 million of units. This is just an unavoidable effect as war would change anything in all of the country parts of life.

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