By Gleb Stolyarov
(Reuters) -New car sales in Russia fell by 17.6% year-on-year in August, accelerating from July’s 11.4% decline, data showed on Wednesday, as lower interest rates failed to revive the market.
The Russian central bank cut its key interest rate by a total of 300 basis points in June and July to 18%, and analysts expect a further gradual easing. But the car market remains under pressure, with sales down for the seventh month running.
Analytical agency Autostat said 122,235 new passenger cars were sold in August. For the first eight months of year, sales were down 23% to 773,264 units.
The car market saw a dramatic collapse in 2022, the year of Russia’s full-scale invasion of Ukraine, as the West hit Moscow with heavy sanctions. It had been recovering steadily since April 2023, but growth stalled in February because of market saturation, rising interest rates and increased scrappage fees.
The market is showing signs of recovery for the second month in a row, but the trend remains unstable, Autostat’s executive director Sergei Udalov told Reuters. From February to June, the falls in year-on-year new car sales ranged from just under a quarter to more than 45%.
Udalov said demand was supported by discounts and low interest rates offered by distributors, who were eager to get rid of stocks. But the central bank’s key rate is still high, which discourages spending and prompts consumers to stash money in bank accounts instead of buying cars. Rapid growth is unlikely in the coming months, he said.
According to central bank data, household deposits in Russian banks reached a new record in July, increasing by 0.8 trillion roubles to 61.1 trillion roubles.
The Association of European Businesses (AEB) said August data shows continued signs of stabilisation in the Russian market, but under current business conditions growth potential may be limited.
The AEB forceasts a 24% drop in new car sales to 1.25 million units in 2025. It said government support programmes and a possible further rate cut would be the key drivers of any market recovery in the near future.
(Reporting by Gleb Stolyarov; Editing by Mark Trevelyan)
