Not every country suffered equal during the Great Recession. Case in point: RussiaAbout a year ago, it had become Europe’s second biggest auto market behind Germany. This year it has fallen to fifth. Car and light vehicles sales there dropped 52 percent to 127,832 in September. Sales of foreign brands made in Russia fell 34 percent in the first six months of this year and sales of Russian brands dropped 47 percent. So far in 2009, sales are down 51 percent.
What happened? Falling oil and commodity prices, inflation, and high interest rates.
As a result, foreign automakers involved in the Russian market have dropped their output by 53 percent in the first half of this year. And many companies are holding back factory expansion and construction plans.
Russian auto manufacturers have been trying to get a boost by forming partnerships. The Russian government has asked Renault to take a 25 percent stake in AvtoVAZ, which also has a venture with General Motors. And the state-controlled bank, Sberbank, is joining in to become a partial owner of Opel in the hopes to transfer its shares to a Russian carmaker later.
Prime Minister Vladimir Putin said that he will not allow it auto industry to fail and is pressing Renault and other shareholders to come up with more money to rescue it. The French automaker has said that it is committed to the partnership and is studying options like making Renault vehicles at AvtoVAZ plants. It has also not ruled out a cash investment.
via Detroit News
