The Moscow Exchange, in response to new sanctions imposed by the United States, has paused trading in dollars and euros as of June 13, 2024. Financial reviewers point out that the ruble may weaken further, reflecting concerns about Russia’s currency exposure and the need for prudent risk management during market volatility.
Industry analysts interviewed by socialbites.ca warn that a weaker ruble could push up prices for vehicles still entering Russia through parallel imports. They note that currency movements often ripple through pricing as importers adjust margins to cover higher costs and transitional uncertainties in the exchange market.
Experts say that vehicles imported directly from China should not see a price spike since payments are settled in yuan. However, shipments arriving from Europe via roundabout payment routes could experience price increases, remarks Maxim Kadakov, editor-in-chief of Za Rulem magazine. He explains that overall costs rise with market conditions, and dealers may seize the moment of currency uncertainty to boost earnings, especially if recycling fee rates rise as anticipated.
Kadakov adds that there are multiple determinants of pricing. He notes that buyers may face bigger sums, but they are currently showing tolerance for higher prices. If dealers add another 5 percent, he suggests demand would not suffer significantly, particularly amid expectations of higher recycling fees.
AvtoVAZ President Maxim Sokolov supports the gradual rise in scrap rates for cars, while the State Duma Industrial Committee has endorsed the approach, though a formal decision remains pending.
Dealers take a pause
Alexey Podshchekoldin, head of the Russian Association of Automobile Dealers (ROAD), told socialbites.ca that supply in the Russian market currently exceeds demand, and the cost of storing vehicles remains high.
He warns there will be no overnight price surge. Citizens should not rush to car dealerships in a panic. The market today differs from 2022 and 2023, with a surplus of available cars. Podshchekoldin notes that supply is about 20-30 percent higher than demand.
Podshchekoldin explains that dealers now hold more cars than they can sell, so there is little point in pushing prices up. If prices rise, sales could slow and dealers would incur carrying costs from warehoused stock. He highlights that high borrowing costs compound the situation, with interest rates on funds borrowed by dealers running around twenty percent annually.
According to him, the market will respond to shifts in the ruble’s value and the weighted average exchange rate, leading to price adjustments. He concludes that there is a need to develop mechanisms that mitigate these risks and stabilize the market in the face of currency fluctuations.
Nevertheless, ROAD’s president offers a cautious forecast: price stability for the next month. Oleg Moseev, founder of the Automarketer project, observes that ruble depreciation typically feeds through to vehicle prices and officially imported cars over a three-month horizon.
He cautions that a strong devaluation could have a direct effect on pricing, though the exact exchange rate trajectory remains unclear. Vehicles moved via parallel imports tend to become more expensive quickly when the ruble weakens, while finished-form deliveries from distributors show price impacts after roughly three to four months, Moseev notes in a conversation with socialbites.ca.
For cars assembled in Russia, the impact of a weaker ruble tends to appear over a longer horizon—up to six months. This includes models from Chinese brands assembled domestically, such as Haval, and even domestic manufacturers like AvtoVAZ, which rely on imported components. Moseev adds that locally produced vehicles are somewhat insulated, yet the overall dynamics still reflect the broader import structure.
He emphasizes that changes in the exchange rate do not yield immediate, uniform effects across all segments. For vehicles produced domestically, the connection is indirect, and the market currently lacks a large supply of such models. When it comes to imports, manufacturers prefer measured pricing moves to avoid destabilizing demand, Moseev concludes.