August’s collapse in the automotive market casts doubt on forecasts that the slowdown is stabilizing

15 september 2016

“August 2016 saw the largest decline in the sales of cars and light commercial vehicles since January: on an annual basis sales were down by 18%,” sums up Deputy Head of the Analytical Center Gleb Pokatovich. “In the first 8 months of the year the market fell by 14.9% and this is casting serious doubts on the forecasts of the Association of European Business regarding annual sales (1.44 million vehicles, which represents a fall of -10.3% on last year).” In order to hit those targets, sales in September through December not only have to stop falling but must even demonstrate some modest growth.

However, the Association is optimistic about fall sales, predicting that the decline for the year will be at around 10%, the expert notes. The optimism is based on the fact that demand is not distorted by currency exchange rates. One positive sign was that August saw an increase in the imports of land vehicles from outside the former USSR by a third on an annualized basis. The low base effect may also play a positive role: last September through December sales in the automotive market were down 29-46% y-o-y. On the other hand, this year sales are falling against a background of deteriorating consumer expectations and sluggish trends in the key macroeconomic indicators (retail sales were down 5.6% in the first 7 months of 2016 year on year, while real disposable income was down by 5.3%).