Mar 6, 2008

What's the Next Top Automotive Market?

What happens when you throw off the shackles of Communism? Well, one thing that happens is that people can afford to buy cars. According to R. L. Polk & Co., Russia is on the verge of becoming the largest automotive sales market for new cars in Europe by 2010. While other, larger European markets remain stagnant, the demand for cars in Russia is growing. In 2007, new-car registrations in Russia exceeded the two-million mark for the first time. The 2.35 million new registrations put Russia in fourth place in Europe behind Germany, Italy and the United Kingdom, and the momentum is expected to continue.

Demand for cars in Russia has been strong this decade, and it is growing stronger. Approximately one million new cars were sold each year through 2002. During the last five years, demand for cars has grown by approximately 140 percent. Future growth is estimated to be approximately 60 percent, which will result in approximately 3.7 million new registrations by 2010. This registration level exceeds every other European country today.

At the same time that Russia’s car sales have skyrocketed, the dominance of Russia’s car company -- Lada -- has been declining. Russian new vehicle registrations attributable to Lada decreased from approximately 70 percent in 2002 to 27 percent in 2007. It is estimated that by 2010 more than 80 percent of all new registrations in Russia will come from manufacturers other than Lada.

“A number of manufacturers are now selling more new cars in Russia than in any other European country,” said Ulrich Winzen, chief analyst, forecasting and consulting for Polk Germany. “For Toyota, Nissan, Mitsubishi, Hyundai, Kia and Chevrolet, Russia represents the strongest European market in terms of sales.”