Changes obvious in today’s car market

2012 marked first year for automakers and car dealers of Belarus and Russia within Customs Union and Single Economic Space conditions
By Vladimir Yakovlev

Belarus, Russia and Kazakhstan initially imposed relatively high import duties on passenger cars on forming their Common Economic Space. There was speculation that this would adversely affect the market. However, those who believed in the development of the domestic auto industry have been proven correct. There were record sales in Russia last year: for passenger cars and light commercial trucks. The Belarusian car market also did quite well, thanks largely to the new Volga Car Plant, which sold over 1,200 Priora cars in Belarus. In addition, Niva cars, Samara models and the new Granta (220 sold) made their mark. Altogether, they comprised about 40 percent of all cars sold in Belarus.

Belarus also bought cars assembled in Russia, including 856 Volkswagen Polo sedans (one of the records of the year). Renault’s Logan and Sandero led among imported cars, with over a thousand sold. The Kia Rio followed behind, with the Nissan Almera. Those imported from outside the Customs Union have dropped significantly in number.

In Russia, crossovers and mid-class sedans remain popular, while Belarusians tend to opt for smaller, A and B class, cars. High interest rates on loans are deterring citizens from buying more expensive cars, with the number bought using bank loans dropping fourfold. More than half of drivers are still content to buy second hand cars, although the figure used to be three-quarters. In fact, 80 percent of potential car owners say they’d look at used cars before buying new, which is the opposite of the situation in Russia.

Belarus and Russia are seeing sales of new luxury cars growing. In Minsk, an official Land Rover dealer opened last year (run by Atlant-M across Belarus, Russia and Ukraine). At $100,000 or more, few believed the venture would prove successful. Nevertheless, last year, Belarusian citizens and companies purchased 16 luxury cars from the dealership, rivalling the number of Mercedes sold. By Moscow standards, it’s nothing, of course. Minsk’s Land Rover dealership actually charges less for servicing than the dealerships in Russia, leading to extra repair and maintenance work.

Belarusian car dealers are worried that Russia’s joining of the WTO may lead to reduced import duties for foreign cars, and increased competition as a result. Belarus has no plans to reduce duties and already charges higher VAT, yet is managing to keep its prices on a par with those in Russia. If business conditions change significantly, it could be difficult to keep prices equal and a gradual rise in car prices across Russia, Belarus and Kazakhstan is expected. 
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