Under the situation of Russia and Ukraine, is the auto market in the two countries okay?

Since the escalation of the situation in Russia and Ukraine at the end of February, the global auto market has been more or less affected.And Russia and Ukraine, which are at the center of the "storm", have suffered a huge blow.

The car market in Russia and Ukraine was bleak in thefirst half of the year, and salesfell sharplyyear- on-year

According to data from the Association of European Businesses (AEB), sales of new cars and light commercial vehicles in Russia plunged 82% year-on-year to 27,761 units in June.

Last month, Isuzu was the only brand whose sales in Russia increased year-on-year, with an increase of 16%. The sales of other car brands in Russia showed a trend of decline year-on-year.Among them, Lexus and Volvocar salesfell the most year-on-year, both 98%; Changan Automobile's decline was the smallest, only 14%.Sales of brands such as Lada, Kia and Renault fell by more than 80%, while brands such as Volkswagen, Skoda and Toyota fell by more than 90%.

Lada, Kia and GAZ LCV were the best-selling car brands in Russia in June, with sales of 7,484, 3,703 and 2,710 units respectively.Lada is a local Russian car brand, but since the situation in Russia and Ukraine, the factories that produce the brand's cars have often suspended production, and it is not easy to maintain sales of more than 7,000 vehicles.

It's worth noting that only eight automakers sold more than 1,000 vehicles last month, while brands like Honda and Fiat sold less than 10 a month.

In the first half of the year, sales of new cars and light commercial vehicles in Russia fell by 57,5% year-on-year to 370,228 units.Among them, the sales of most car brands declined year-on-year, only Cheryexeed, Chevrolet and Isuzu saw sales increase, with an increase of 254%, 77% and 39% respectively.Sales of Lada, Kia, Hyundai, Renault and other top-selling brands all fell by more than 50%; Volkswagen and Skoda both fell by 72%.

(Special note: The author checked the monthly sales data provided by AEB, and finally calculated that the sales of new cars and light commercial vehicles in Russia in the first half of the year were 345,875 units, which is slightly different from the 370,228 units provided by AEB in the table.)

According to data released by the Ukrainian Automobile Manufacturers Association (Ukrautoprom), Ukraine registered 2,902 new vehicles in June, down 67.1% from 8,816 in the same period last year, and up 14.1% from 2,543 in May.In the first half of this year, Ukraine sold 17,828 new cars, down 63.2 percent from 48,380 in the same period last year.

Overall, Toyota, Renault and Volkswagen were the top three best-selling car brands in Ukraine last month.Among them, Toyota and Renault maintained their top two rankings; Volkswagen replaced Skoda, which was third in May, and its ranking also rose one place from May.

In addition, in June, only 8 brands registered more than 100 vehicles in Ukraine, and the bottom three brands did not even have more than 20 registrations.It is worth noting that the sales of Russian brand Lada in Ukraine dropped from 170 in the same period last year to 16, a 90.6% year-on-year drop.

In June, the registrations of most auto brands in Ukraine showed a year-on-year decrease and a month-on-month increase.In terms of year-on-year data, sales of nearly two-thirds of the brands fell by more than 50%, while JEEP and Chevrolet achieved more than 200% growth.From the month-on-month data, the sales of more than two-thirds of the brands have achieved growth, of which Fiat has increased by more than 300% and Chevrolet has increased by more than 200%.

In general, in the first half of this year, the sales of new cars in Russia and Ukraine have maintained a year-on-year downward trend. Especially since the escalation of the situation in Russia and Ukraine, the sales in these two countries have fallen sharply compared with the same period last year.However, it is worth mentioning that Russia's June sales rebounded slightly compared to May, while Ukraine's sales have maintained a month-on-month recovery trend since April.

Faced with a poor first-half sales performance, Russia's Ministry of Industry and Tradeforecaststhat passenger car sales in Russia are expected to fall by about 50% to 750,000 units in 2022 as they struggle to cope with supply problems.AEB also expects Russian car sales to fall by at least 50 percent this year compared to last year.

The "self-rescue" of the Russian auto industry

Over the past 20 years, with the development of the Russian economy, Western automakers have entered the Russian market and assembled cars locally, and Russia has gradually become one of the largest auto markets in Europe.In contrast, the peak of the Ukrainian auto industry came to an end more than a decade ago.Under the impact of the global financial crisis, the sales of new cars in Ukraine plummeted from 662,000 in 2008 to 175,000 in 2009 (data from the carsalesbase website), and the annual sales in recent years are even more difficult to exceed 100,000.Therefore, for Ukraine, which has been tepid and at the center of tensions in the auto industry, it may be difficult to come up with a good strategy to save falling sales.Russia, on the other hand, can take corresponding measures to "rescue itself".

However, it is not an easy task for Russia to save falling car sales.Since the escalation of the situation in Russia and Ukraine, the United States and its allies have successively announced sanctions against Russia. For the Russian auto industry dominated by foreign automakers, the sanctions have brought a very serious negative impact.Many automakers including Audi, Honda and Porsche have suspended operations and exports in Russia.

To make it even harder, “the Russian auto industry is heavily dependent on foreign components and there are almost no factories that don’t use foreign platforms. Russia is just a car assembly line, and we are ten years behind the rest of the world,” said the Higher School of Economics in Moscow. Georgy Ostapkovich, an auto industry expert, once said.

In addition, Azat Timerkhanov of consulting firm Avtostat also revealed that car companies that can maintain operations in Russia face logistics problems."People are looking for alternative suppliers, usually Chinese companies, but there is no guarantee of success."

Based on this, Russia began to study a series of "self-rescue" measures for the automobile industry.First, Russia will revive the Soviet-era car brand Moskvich.In May, Moscow Mayor Sergei Sobyanin said the Renault Moscow plant would be nationalized, which would then be converted to produce Moskvich passenger cars.In addition, Russian truck manufacturer Kamaz will be the main technology partner of the plant.It was also revealed that Kamaz is in talks with Chinese automakers to use its design, engineering and production platforms to produce Moskvich-branded cars.

Second, in July, Iran's official news agency IRNA reported that auto industry officials in Iran, Russia and Turkey were considering jointly designing and manufacturing vehicles."These three countries can capture a huge market for their products," said Mohammadreza Najafi-Manesh, chairman of the Iranian Auto Parts Manufacturers Association, adding that "by producing all the parts needed for a car, you can avoid the Currency transfers are used to procure components, and there is also an export market.”

In addition, before the United States and Europe threatened to impose sanctions on Russia, Russian Industry and Trade Minister Denis Manturov said, "In order to free the auto parts sector from dependence on imports, we have launched an auto industry development fund program (Industrial Development Fund). Fund) to provide soft loans (i.e. loans with favorable terms) to domestic auto parts manufacturers, etc., to further build parts production in the country.”

Russia has been exploring various ways to save the battered auto industry, and we will wait and see how the future unfolds.