Why are new cars getting cheaper [in Russia]?, by Olga Samofalova for VZGLYAD. 06.26.2024.
Deliveries of new models have reduced car prices in Russia.
New passenger cars unexpectedly fell in price to 2.8 million rubles on average in the market, Autostat calculated. Although for the last 10 months the average price has remained above 3 million rubles after the rise in price last summer. What helped reduce car prices this spring and will this trend be maintained further?
The average weighted price of a new passenger car in Russia in May fell to 2.8 million rubles, reports the Avtostat agency.
Last summer, such cars cost more than three million and did not become cheaper for many months in a row. From June 2023 to April 2024, that is, for 10 months, the average price was consistently above 3 million rubles. In March 2024, a maximum of 3.4 million rubles was reached. Only in April did the weighted average price begin to decline: in April by 7% compared to the previous month, in May – by another 8.5%.
What explains this trend and how long will it last?
Experts from the Avtostat agency associate the fall in the weighted average price with a change in the sales structure of new passenger cars. On the one hand, the market share of cars from “budget” and “mid-price” brands has increased. Thus, for the market leader - the domestic Lada - it increased from 30.8% in April to 31.5% in May. The situation is similar for the Chinese brands Chery, Haval, Changan, OMODA, Belgee, plus the Russian brand Solaris. The weighted average price for models of these brands is less than 3 million rubles. As a result, the market share of all these six brands increased by 4% over the month, notes Autostat.
“After the introduction of sanctions in Russia and the departure of foreign brands, the supply of new cars decreased sharply. This led to shortages and rising prices as demand remained high. The market turned out to be less competitive, which allowed the remaining producers to dictate higher prices. And a significant increase in direct deliveries from China this year has led to lower prices for some models. The emergence of new Chinese brands also increased competition in the market, which forced manufacturers to reduce prices,” believes Artem Deev, head of the analytical department at AMarkets.
Exports of passenger vehicles from China to Russia have been growing for the fourth month in a row.
In May, China exported cars to Russia for a record amount of $1.3 billion since November last year. Compared to last year, sales increased by 63%.
Moreover, Russia took first place in the ranking of buyers of Chinese cars directly from China. Nobody buys that many of them anymore. In five months, 373 thousand cars from China were delivered to Russia. In second place is Mexico, where half as many cars were sent. Next are Brazil, Belgium and the UAE.
As supply in the market expanded, demand slowed. “After the key rate was increased by the Bank of Russia and the cost of loans increased, the demand for cars slowed down, consumers began to focus more on the middle price segment and budget cars, which led to a reduction in the average cost,” the press service of Avtodom Group notes.
"New buyers are entering the market, having benefited from rising salaries. They are also looking at more budget models, which affects the average cost of a car," says Sergey Grishunin, managing director of the NRA rating service.
“At the same time, there is a decline in sales of premium segment cars - this happened for the first time in 14 months. In May, sales of new cars in the luxury segment decreased by 22% compared to last year,” indicate in the Avtodom Group of Companies.
According to Autostat, there is a decline in market share for a number of “expensive” and “very expensive” brands: Exeed, Tank, Lixiang, Voyah, Zeekr. Western luxury car brands Toyota, BMW, Mercedes-Benz, Volkswagen have long stopped official deliveries to Russia, but now their models have become available through alternative imports. The weighted average price of such cars is significantly more expensive than 3 million rubles, and their total market share decreased by about 1.5 times over the month, Autostat notes.
Parallel imports of cars dropped sharply due to the introduction of a recycling fee on April 1, which made importing cars in this way less profitable. Typically, more expensive hybrid and electric cars, as well as Toyota and BMW, came to Russia through this channel. Mostly premium brands of cars are ordered from abroad, because it becomes pointless to import other models unofficially.
“Direct deliveries from China are becoming more profitable and efficient for manufacturers in terms of logistics and prices. This is also facilitated by the deepening economic relations between Russia and China. At the same time, parallel imports are more risky and unstable, as they depend on the political situation, in particular,” says Deev.
“We also see a decrease in prices for cars produced in Russia, since they were initially overpriced. Plus a seasonal reason - many car showrooms and dealers have made very attractive special offers.
But by the beginning of July, stocks of last year's cars will be exhausted - and the price pendulum may go back. In the fall, we may get an increase in the average bill for a car,” Grishunin does not rule out.
It is curious that in Belarus you can buy domestic Lada Granta and Vesta much cheaper than in Russia. According to the Quto portal , one of the brand’s Belarusian dealers sells a car at prices lower than in Russia - for 891 thousand rubles versus 992 thousand here.
Lada Vesta cars in Belarus cost even less than in Russia: the difference exceeds 300 thousand rubles, says Nikolai Pereslavsky, head of the economic research department of CM Service. “The difference with the Russian price of 20% is explained by the absence of a recycling fee in the price, which when importing such a car by a legal entity is about 300 thousand rubles. If you buy a car for personal use by an individual (and do not sell it within a year), then the recycling fee when imported from Belarus will be only 3.4 thousand rubles. If we add here the services of an intermediary for registration, transportation costs, and accommodation, then even taking into account these expenses, the savings are in the region of 200 thousand rubles,” says the interlocutor. Therefore, it is possible that there will be people who want to travel to Belarus for the sake of automobile tourism.
What awaits the automotive market in Russia this year?
“In May 2024, the share of Chinese brands in the Russian car market was 54%, in the premium segment – 80%. Over the past two months, the cost of new Chinese-made passenger cars has been decreasing by an average of 5-9%.
Large warehouse balances and deliveries of new models from Chinese concerns create the prerequisites for the fact that prices for cars from China will remain stable or continue to decline slightly,” predicts the Avtodom press service.
However, Dmitry Baranov, a leading expert at Finam Management, believes that car prices in 2024 will fluctuate: after the end of the holiday season, the demand for cars may increase, which will be reflected in prices - the cost of the most popular models may increase. At the same time, at the end of the year, car dealers and manufacturers, as a rule, clear warehouses for cars of the new model year and can reduce prices on certain items, but only for a short period, the expert adds.
At the same time, there is no threat to AvtoVAZ yet. “They have been talking about the fact that AvtoVAZ is about to be displaced from first place in sales for many years, but this is not happening, because the company does not stand still, it is developing, producing new car models, modernizing production, and has a developed sales network in country,” says Baranov.
The Russian government will continue to support both the domestic auto industry and foreign manufacturers who are ready to create production in Russia, and preferential car loan programs will continue. The share of domestic cars will remain at 35-40%. Chinese car imports will take a share of 50-60%. The remaining part of the market will be retained by parallel imports. Car sales will be about 1.3-1.5 million units,” Pereslavsky expects.
https://vz.ru/economy/2024/6/26/1274844.html
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