Car Prices in Russia Edge Higher as Ruble Dips

The exchange rates for the dollar and euro on the Moscow Stock Exchange as of July 6 reached new peaks, surpassing the levels last seen at the end of March 2022. One US dollar traded at more than 93 rubles, while the euro moved beyond the心理 threshold of 101 rubles per unit.

When cars get expensive

In discussions with socialbites.ca, car dealers and industry analysts agree that prices are likely to rise. They diverge on the magnitude of the impact the ruble’s decline will have on showroom price tags. Avilon, one of the largest automotive groups in the metro area, anticipates a modest price uptick by month’s end.

“Right now importers are pausing to gauge the weaker ruble,”

explains Renat Tyukteev, deputy general manager for new car sales at Avilon, to socialbites.ca. “If the ruble continues its downward trajectory, we could see price revisions of 3 to 5 percent this month.”

He notes that for official Chinese-brand imports, price increases should be gentler as manufacturers smooth out currency swings in their pricing models. Tyukteev adds that dealers will update the price tags for vehicles brought in by parallel import channels as soon as feasible.

Andrey Olkhovsky, CEO of the Avtodom group, takes a more cautious view, predicting that ruble depreciation will show up in car prices by the end of summer, driven by stricter pricing policies from automakers with strong ties to China, which dominates the Russian market.

“Chinese firms are taking a tougher stance than European manufacturers did before,” Olkhovsky observes in the interview. He estimates an eight to twelve percent price hike within two months. He also foresees a contraction in the Russian market’s import-driven segment, cautioning that the new pricing reality may take one or two months to fully take shape.

“Given the ruble’s current dynamics, parallel imports may stall entirely. Availability of car supply is shrinking as buyers hesitate to purchase vehicles that carry all delivery costs from parallel import channels,” Olkhovsky adds.

Better buy now

Sergey Burgazliev, head of Avtodom and an independent advisor to the automotive sector, concurs that the ruble’s depreciation should push prices higher in roughly two months, with an estimated rise of around 10 percent by September.

“Vehicles already contracted and paid for will remain untouched. The on-street situation depends on the terms of payment,” Burgazliev tells socialbites.ca.

He notes that the price surge will affect Chinese brands less and hit vehicles imported from Arab states, Japan, and Turkey more strongly. This applies to both new and used cars.

“A price uptick is almost certain. If you want a car before prices climb, it’s wise to act now. In the long view, Russian-market observations show cars becoming cheaper only rarely, and even then only slightly,” Burgazliev argues.

The cost of a customer-ordered vehicle from abroad will already factor in a higher exchange rate, but a future ruble dip will also influence prices of domestically produced cars since many components are purchased with foreign currency. Sergei Tselikov, general director of the AUTOSTAT analytical agency, cautions that every car assembled in Russia carries a currency component.

“If we look at brands like Moskvich, the currency component can reach 80 to 90 percent,” he explains in a chat with socialbites.ca. He adds that AvtoVAZ’s share sits around 50 percent in this regard and that where the currency influence is smaller, inertia often prevails.

Andrey Terlyukevich, general manager of the Avtospetstsentr group, remains hopeful that despite higher prices, Russia could see sales approaching one million cars by year’s end.

“If there is a genuine need for a car, delaying a purchase is not wise since there is no sign of price declines. Chinese cars continue to be among the market’s most in-demand options,” Terlyukevich notes.

Statistics from the Automobile Manufacturers Committee of the Union of European Enterprises of the Russian Federation show that in the first half of 2023, sales of new passenger cars and light commercial vehicles in Russia rose by about 10 percent year over year, totaling 428.3 thousand units. The AEB also projects the Russian market reaching one million vehicles by year’s end.

Source attribution: Socialbites.ca reports the insights of industry officials and market observers on price movements in Russia’s automotive sector amid currency fluctuations. [Citation: Socialbites.ca]