Russia’s Auto Market: Overstock Anxiety and Forecasts for 2024
Industry observers in Russia, including representatives from Chinese brands officially operating in the country, estimate that roughly 1.7 million passenger cars could be sold by year end. This goal sits against a backdrop of last year’s sales near 1.1 million and a cautious 2024 forecast around 1.3 million. Such a gap signals potential warehouse stockpiling and supply-demand misalignment, according to Alexey Podshchekoldin, head of the Russian Association of Automobile Dealers (ROAD), who spoke at a Moscow briefing.
Podshchekoldin warned that bringing additional models to the market without corresponding demand could spark a price-cutting cycle. He cautioned that a discount war might emerge, harming both manufacturers and dealers and increasing the risk of bankruptcies across the sector.
The overheating in the market is partly blamed on tight credit access. A large share of car buyers still relies on financing, and a post-pandemic shift toward higher loan costs has eroded affordability. Podshchekoldin noted that a new car in Russia now carries a price tag close to 3 million rubles, while the market faces a shortage of both inexpensive vehicles and flexible financing options.
Industry voices suggest that Chinese automakers may need to recalibrate their 2024 sales targets. The combined sales plan for Chinese and domestic passenger cars as of December 2023 stood at about 1.7 million units. When adjusted for market capacity—roughly 1.1 million as an optima and about 1.3 million as a ceiling—the risk of an extra 500,000 to 600,000 cars entering Russian stock becomes real, according to Podshchekoldin.
Andrei Olkhovsky, CEO of the Avtodom group, acknowledged that the dealer network has already seen warehouses hold cars for more than two months. He attributed the buildup to a drop in demand, continued deliveries of cars pre-ordered earlier, and a timing misalignment in sales plans. He added that promotions and special offers would depend on supplier conditions and the willingness of manufacturers to maintain volume shipments. A more conservative approach could keep prices steady if demand-based adjustments are made, Olkhovsky explained to socialbites.ca. He also noted that stock levels vary widely by company, reflecting independent sales strategies and warehouse planning.
Ilya Petrov, head of retail at the Avilon group, argued that the perceived excess of stock for Chinese brands and models exiting the Russian market is overstated. He contended that current stock levels do not pose an immediate threat to sellers or importers and are largely a reflection of a broad product mix across configurations and colors that align with consumer preferences. Yet he cautioned that a healthy showroom inventory does not guarantee a broader recovery for the industry, as shortages continue for certain models and segments.
Petrov emphasized that price declines are not a given. He said pricing is influenced by a range of factors, including the exchange rate against the ruble, and he forecast that these dynamics will likely persist into 2024. The evolving price landscape will continue to affect dealer and importer decisions in the coming months.
The dynamics of Chinese automotive operations are noted to differ from European, Japanese, and Korean firms. Some observers, including Oleg Moseev, founder of the Automarketer project, argue that many planned models may already be in production, with components secured, implying that any discounts would ripple outward first from dealers and then to the regional offices of Chinese brands. Moseev pointed out that typical stock levels for normal sales should be around 1 to 1.5 months, with two months considered a conservative buffer. He observed that several brands have already accumulated stock for roughly three months, contributing to the broader overstock narrative. He suggested that a price cut could shift demand toward financing options and even push some buyers toward the secondary market or prompt them to shorten the hold on their current vehicles in favor of a new purchase.
Overall, the market appears to carry more vehicles than the year’s sales plan can absorb, with a rising trend in overstock conditions evident over several months. Production and delivery cycles complicate the picture; plans for 2024 were coordinated with central management and suppliers, and manufacturing in factories has already begun. Some industry voices argue that a targeted price reduction could alter consumer behavior—potentially drawing buyers from the new-car market to used vehicles and prompting some to consider selling their current cars sooner rather than later.
Looking ahead, dealers may need to offer discounts in the first quarter to move stock. With margins on vehicles commonly in the 5–7% range, dealers may not be able to absorb heavy discounting without risking losses. Analysts anticipate that price competition among distributors could intensify in the second quarter. This narrative draws on current market signals and reflects ongoing adjustments as the industry navigates inventory, demand, and financing conditions without relying on any single external source for confirmation. (Source attribution: industry briefings and market analyses compiled for review as of late 2023 and early 2024.)