Car Sales May Halve in 2009, PwC Says

MTMany global carmakers, such as Chevrolet, have been forced to slow or halt production at their local factories.
Domestic car sales could drop by 25 percent to 50 percent in 2009 as the global financial crisis squeezes demand, erasing two years' rapid growth, auditing company PricewaterhouseCoopers said Tuesday.

"The falling availability of loans, growing unemployment, slower personal income growth, the devaluation of the ruble -- all taken together, these factors could lead to a contraction in sales this year of 25 to 50 percent," said Stanley Root, a partner at PwC.

In separate research, the Association of European Businesses has forecast a 19 percent fall in foreign car sales in Russia during 2009, calling this an optimistic scenario.

The slowdown in Russia's automotive market began in October 2008, when many banks were forced by the credit crunch to stop giving affordable car loans.

Before the onset of the crisis, Russia was poised to become the largest car market in Europe in 2009, giving carmakers hope of offsetting the losses they face in the West. Those hopes were frustrated in the fourth quarter of 2008.

Domestic demand for foreign cars dropped 15 percent year on year in November and 10 percent in December, leading to full-year growth of 25 percent, down from 61 percent in 2007, the AEB said.

"The car market in Russia [for 2009] will return to levels seen two years ago, that is, in 2006," Root said.

Last year, 3.2 million automobiles -- worth $69 billion -- were sold in Russia. A 50 percent decline implies sales of 1.6 million units in 2009, while a 25 percent drop implies sales of 2.3 million units.

Many global carmakers in Russia have been forced to slow or halt production at their local factories. General Motors, Ford Motor and France's Renault all said they were idling their Russian assembly lines late last year.