Market Trends of Russia Used Car Industry
This section covers the major market trends shaping the Russia Used Car Market according to our research experts:
Hatchback and Sedan Used Car Sales to Witness Surge During Forecast Period
The hatchback and sedan cars segment holds a significant market share in terms of revenue in 2021 and is projected to grow during the forecast period. The growing consumer trend toward diving flexibility is likely to increase the demand for used hatchback and sedan cars across the country.
Russia has a major presence of car dealers including Volkswagen AG, BWM AG, and Mercedes-Benz and these companies are expanding their dealerships across the country and is likely to witness major growth during the forecast period. The Russia-Ukraine war has plunged car production across the country owing to which demand for used cars is high across the country. According to The Association of European Businesses (AEB), the sales of new cars in Russia has been declined by 50% in 2021.
Major vehicle manufacturers reopened their manufacturing plants in Russia. Renault has owned a controlling two-thirds stake in the Russian carmaker Avtovaz. High demand for Renault hatchback and sedan cars across the country also witnessing major growth in the market. For instance, In 2021, Avtovaz sold 350,000 vehicles in 2021, making profits before tax of EUR 186 million for Renault.
Besides these scarcity of luxury vehicles and other premium car models and long waiting times for new models are some of the key factors which expected to influence consumers to opt for affordable and easily available hatchbacks and sedans. For instance, Volkswagen in 2022
has suspended production at its Kaluga and Nizhny Novgorod sites until further notice. Japanese company Suzuki has suspended car exports to Russia and Ukraine from its Hungarian factory, and Daimler-Benz said it lowered output to two shifts at its Hungarian plant.
Therefore, above mentioned factors and developments to improve the sales of used cars especially hatchbacks and sedans and likely to poise growth positively during the forecast period.
Rise in demand for Used Luxury Cars across the country
The rise in demand for used luxury cars across the country is witnessing major growth in the market. In February 2022, the Russians became the owners of 166 used luxury cars. This is 60% higher than in February 2021.
Easy access to financing options, low entry prices, and annual maintenance contracts make the used car market more organized. Also, the average age of used luxury vehicles coming into the market is between 2 and 3 years compared to 5-6 years for a mid-size or small-scale vehicle, making them a better option in some cases.
- For 6 months of 2022, official dealers in Russia sold 216.4 thousand used cars. n other words, only every tenth used car for the previous six months was sold through dealer networks. In 2021, Russians purchased 602,000 used luxury cars.
Factors such as the growing consumer preference for luxury cars and the country's youth inclination toward the top brands operating in the market are expected to drive the demand for used cars. Besides these, due to the ongoing war, Countries around the world are tightening sanctions against Russia in response to the country's invasion of Ukraine and as a result, companies are limiting, halting or fully exiting business activities in Russia, including many automakers. For instance, in March 2022 Renault announced that it would suspend some operations at its car assembly plants in Russia due to logistics bottlenecks that have caused shortages in components.
Further, decrease in new car sales indicate that majority of consumers are preferring used cars due to their own limitations like economic turmoil and limited availability of latest models in the country. For instance, According to Association of European Business (AEB), 55,000 new cars and light commercial vehicles were sold in Russia in March 2022, down by 63% from March 2021. All brands European, American and Asian suffered losses, but the hardest hit among the big sellers were Volkswagen, Skoda, and Toyota. The above mentioned trends indicate that market for used luxury cars to grow over forecast period.
