Car sales on the up on back of cash for clunkers

Sales of new cars in Russia are expected to jump 15% this year, according to Pricewaterhouse Coopers, which says the cash for clunkers programme has boosted sales

Russians are once again getting in line to buy new cars. The wait to get behind the wheel of a Mercedes is up to 3 months, and if it's a new Russian built Lada you want, well that could be as long as half a year in some regions.

So far the overall sales are up 3% in the first half of this year. However the market remains segregated with the most expensive and the cheapest models shifting quickest, according to Stanley Root, Partner, Auto Industry Leader at PwC Russia.

“Luxury cars are doing quite well – Mercedes, BMW, Audi are growing really strongly. So it means people who have got money are still prepared to spend it on good quality cars. It’s the segment in the middle I was talking about – middle class cars, the cars produced by Volkswagen, Ford and General Motors – that segment in the middle is still struggling somewhat. “

Sales of Russian LADAs have risen 20% this year. PricewaterhouseCoopers says the main driver has been the cash for clunkers program. Stanley Root says it has been more successful than expected, but could be refocused.

"It's clearly have been very effective. The question is how long the programme will last and whether there will be any modifications to the programme. At the moment its aimed, really, at the cheapest cars in the market, but its possible the programme could be modified to target, say the new model cars which are being produced by Russian producers, in alliance with foreign partners."

The cash for clunkers program together with higher import duties on foreign cars have boosted the share of domestic manufacturers in the Russian market to 64% this year.

PwC believes the Russian auto market still has tremendous potential for growth. At the moment for every 1000 people there are 235 cars, in more developed markets the figure two or three time greater.