Russian car sales fell 38% in May as ruble gains eased pressure
MOSCOW (Bloomberg) -- Russian car sales slumped 38 percent in May. It's the country's a fifth straight month of decline this year, but the dip was less severe than a 42 percent drop in April as government measures to assist the industry start to provide some help.
Sales of new cars and light commercial vehicles dropped to 125,801 units last month from 201,487 a year ago, the Association of European Businesses in Russia said Monday in a statement.
"This relative improvement is unlikely to bring about a fundamental turnaround for the market," Joerg Schreiber, chairman of the business group's automobile manufacturers committee, said in the statement. Still, it "should help to slow down the pace of year-on-year sales decline in the coming weeks and months," he said.
The group will update its 2015 forecast next month, Schreiber said. Sales may contract 24 percent this year after a 10 percent drop last year, according to its estimates. Five-month sales are also down 38 percent with 641,933 units sold through May.
Russian consumer demand, which powered growth for more than a decade, withered as the ruble weakened last year and inflation jumped to a 13-year high in March. The government offered subsidized auto loans and allowed consumer leasing in the second quarter after a used-car rebate program started last year failed to ignite sales.
The ruble lost about half of its value against the dollar last year, inflating the cost of cars, most of which are manufactured abroad or produced in Russia from imported parts. The ruble has gained more than 8 percent this year, the best performer of currencies tracked by Bloomberg.
Russian state support may boost auto sales by at least 300,000 units this year, Industry Minister Denis Manturov said last month. Sales under the subsidized auto loan program reached 38,500 vehicles in the first month and a half after its introduction, he said.
Russia has succeeded in getting inflation under control, central bank Governor Elvira Nabiullina told lawmakers Monday in Moscow. She said she sees price growth "easing considerably" while inflation risks remain.
Consumer prices rose 15.8 percent in May from a year ago, compared with 16.9 percent in March, the fastest since 2002.
After a 1.9 percent decline in the first three months, Russia's recession will deepen in the second and third quarters, with gross domestic product set to shrink 4 percent in each, according to Bloomberg surveys.
The weaker ruble and inflation are eating into consumers spending and sending real disposable income down 4 percent in April, according to the Federal Statistics Service.