"While we're enjoying the growth": what will happen to the sales of new cars

Sales of new cars in May and the first five months show a steady positive trend: plus 20% and 12%, respectively. However, these "beautiful" numbers should not be misleading.: They are related to the extremely negative market situation that was noted last year, analysts explain. In the second half of the year, sales dynamics are likely to be in the red, experts predict. The details are in the Izvestia article.

Spring advantages

According to the results of the last month of spring, 109,892 new passenger cars were sold in Russia. This is reported by the analytical agency Autostat, based on the number of issued EPTS. This is 20.5% more than in May last year, noted during the online conference "Autostat. Operative" Dmitry Yarygin, Deputy Head of the agency's Analytics Department. He also said that the share of Russian-built cars among the total number of new cars sold last month reached 65%. According to the results of five months, 492,342 cars were sold in the country.

Lada retained its leadership in the Russian market last month: it accounted for more than a quarter of all cars sold — 28,365 units. Haval retained the second place by a wide margin from the leader (15,834 cars and 14.4% of the market). The Russian brand Tenet ranks third with 11,511 cars sold (10.5% of the market). Last month, only these three brands overcame the 10,000 mark.

The top five also includes Geely and Changan brands (6836 and 5194 cars, respectively). The Belarusian Belgee was on the sixth step (5,156 cars), followed by Toyota (3,014 cars — all delivered in Russia under the alternative import mechanism). Completing the top ten are Jaecoo (2,861 units) and Jetour (2,830 cars), as well as Solaris (1991 car).

Lada Granta retained the title of the most in-demand model on the Russian market, which sold 11,480 units in May. "Silver" with the result of 7,763 cars went to the Tenet T7 model. "Bronze" went to Haval Jolion (6690 cars). Completing the top five are two more "Frets" — Vesta (5,651 units) and Niva Travel (3,614 units). Changan Uni-S was in the sixth position, which was purchased by 3053 buyers, followed by Haval M6 (2991 cars). Completing the top 10 are Lada Iskra (2,786 cars), Tenet T4 (2,623 units) and Lada Niva Legend (2,594 cars).

— We understand that Tenet is a replacement for the Chery brand. Haval is showing very good results — it has a net increase of +46% without any replacement for Lada. It is curious that Iskra, which is gaining popularity, is taking a few buyers away from both Granta and Vesta,— said Sergey Udalov, Executive director of Autostat.

Joy with caution

The sales results in May and the results of the first five months look positive, said Sergey Udalov. However, do not forget about the market situation at the beginning of last year, he recalls.

— The first half of last year was negative. That's why we're in a good position right now. 20% is a very pretty figure, but it should not be misleading. Now it seems that the second half of the year will still be in the red, but for now we are happy about the positive dynamics," said the executive director of Autostat.

Autostat's partner, auto expert Igor Morzharetto, also cautiously evaluates the results of May and the first five months. According to his forecasts, despite the obvious positive dynamics, annual sales of new cars are unlikely to be extraordinary.

— In five months, less than 500 thousand cars were sold. This means that the average value for a month is about 100 thousand cars. It is easy to calculate that with such results, approximately 1.2 million, maximum 1.3 million new cars will be sold per year. In other words, we will most likely end this year with approximately the same parameters as last year. They are very low, they are not enough not only to upgrade, but even to maintain the average age of cars in the Russian fleet at the same level," says Igor Morzharetto.

Certain "alarm bells" confirming the concerns of experts can also be traced in sales statistics. The May result of 109.9 thousand cars was about 6% lower than in April (117.5 thousand). However, not all experts consider the May decline to be a harbinger of an impending decline in sales in the car market.

— May is traditionally a more difficult month in terms of the calendar: long holidays, reduced business activity, some customers postpone transactions. In addition, the registration factor is important in statistics: some cars could have been sold in one period and registered in another. Therefore, April-May can rather be considered as months close in volume," Nikolai Ivanov, Director of New car Sales at Rolf, told Izvestia.

The April jump was largely triggered by rumors about a new round of increased recycling since the summer, explains Irina Frank, CEO of Frank Auto.

— The excitement has subsided — May showed a more realistic figure. In five months, the market has been in the black by 11.8% compared to last year, so it's too early to talk about a decline in growth. This is a return to the trend after the April outburst, compounded by the long weekend. The real test for the market is June and July," she said.

Thanks to Util

For the first time in a long time, all models included in the top 10 are produced at Russian car factories. This is a natural phenomenon reflecting the situation on the car market and in the automotive industry, experts say.

— Local assembly gives cars a more competitive price positioning, including due to a different economy of recycling and the availability of support programs. And a more affordable price almost always generates higher demand," emphasizes Nikolai Ivanov.

At the same time, he notes, this situation in itself is not new for the Russian market. If you look at the sales structure up to 2022, for example, in 2020, then a significant part of the most popular models also accounted for Russian-built cars, the expert recalls.

An increase in recycling played a role in the growth in sales of models produced in Russia, Igor Morzharetto believes. This forced companies that had previously imported their cars to start manufacturing them in our country under the same or a new brand, he explained.

— The increase in recycling has worked as a protective barrier. Without it, Chinese imports without localization would cost 15-20% less, and Lada, Tenet, and Solaris would not look so confident in the top 10. But the current result is a combination of recycling, import substitution policy, and the restart of local production facilities. Recycling alone would not have done anything without factories," Irina Frank believes.