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. Last Updated: 07/27/2016

Foreign Car Sales Hit Full Throttle

Business is booming for foreign automakers.

Sales of Hondas, Audis, Renaults, Fords, Skodas and other automakers are up 20 percent to 60 percent this year as more Russians have more cash and new financing options become available.

France's Renault sold 6,042 cars in the first nine months of the year, up 50 percent on the same period in 2001, while Germany's Audi recorded a 40 percent rise to 2,250 vehicles.

Kaliningrad-based Avtotor, which assembles South Korean Kias and German BMWs, said sales were up 51 percent to 3,876 in the first three quarters, while Ford sold 4,027 vehicles, up 52 percent on the year. Japan's Honda sold 891 cars through September, up 60 percent. And Czech Skoda expects a 20 percent increase in sales to 10,000 units for the year.

Andrei Kormilitsin, an analyst at Troika Dialog, said mid-priced foreign cars, which cost between $12,000 and $15,000, have seen the highest growth because rising incomes are making them more affordable. Another factor is the growth of credit opportunities, he said. "Last year 2 percent to 3 percent of import purchases were financed through credit; this year it is more like over 10 percent," he said. "This has added around 40 percent to consumers' buying power."

Russian automakers' share of the market has dropped from 71 percent in 2001 to 64 percent this year, according to state statistics.

More Russians are becoming less concerned with price and more concerned with quality to the detriment of domestic producers, said Ovanes Oganisian, an analyst at Renaissance Capital.

"When choosing between a $12,000 car and a Zhiguli that costs around $6,000, consumers that don't have a hard time paying the extra money opt for a foreign car," he said. "When you buy a Zhiguli, you are just getting a piece of machinery; with a foreign brand you get superior quality, warranties and no headache in service."

Ford said Thursday that it had already received 2,600 orders for the new, all Russian-made Focus, which is assembled at its plant near St. Petersburg and only became available Oct. 3. Henrik Nenzen, president of Ford's Russia division, said the company had only expected 600 orders by now.

Ford, however, has only delivered 300 cars to its clients because it cannot keep up with the demand, a Ford spokeswoman said. "Cars being ordered now are slated for January production. Orders placed before October will be delivered by the end of the year," she said.

Ford's plant in the Leningrad region town of Vsevolozhsk could reach its maximum capacity of 25,000 cars per year in a relatively short period of time, the spokeswoman said.