Skip to footer

Car brands suspend sales in Russia as ruble collapses

Amid Russia's worst economic crisis, some major automakers have temporarily suspended their sales in the country, while others are shifting inventory or planning price increases.

|
Reuters/Alexander Demianchuk/File
While major auto makers like Audi and General Motors have suspended sales in the volatile Russian market, Toyota has no plans to follow their footsteps. However, the company is planning to implement price increases.

Like China or India, analysts often describe Russia as en emerging car market, where a relatively new middle class is expected to drive up car sales to levels comparable to those in more established markets. However, those optimistic forecasts are being put on hold by the collapse of the ruble. In response to a 40 percent drop in the value of the ruble since June, several automakers have suspended sales in Russia, according to Bloomberg.

Amid Russia's worst economic crisis since 1998, customers are snapping up cars to convert their savings into something more tangible. Yet the temporary boon in sales is a problem for automakers because the currency's lack of value is eating into what they get for the vehicles.

Both Audi and General Motors Company [NYSE:GM]—which sells Cadillac, Chevrolet, and Opel models in Russia—suspended sales December 16. GM will deliver cars already purchased, while Audi is in the midst of setting a new price list to account for the ruble's loss of value.

Jaguar Land Rover also reportedly suspended sales, while BMW is shifting inventory to more favorable markets. While it has no plans to suspend sales at the moment, Toyota is planning to implement price increases.

"It's a bloodbath for everyone" Renault Nissan CEO Carlos Ghosn told reporters in Japan Friday, according to Automotive News (subscription required). He said every automaker is currently losing money in Russia.

Yet Ghosn believes the market will stabilize eventually, and no company has talked of leaving Russia permanently. Nissan just started production of the X-Trail at a plant in St. Petersburg and plans to add the Qashqai next year. Audi parent Volkswagen plans to expand operations at its plant in Kaluga as well.

Russia has become an important market for automakers. In 2012 sales surged to 2.9 million, making Russia Europe's second largest car market, behind Germany. Low taxes have also enticed foreign automakers to build vehicles there. However, the market is also volatile. Sales this year were down 12 percent through November, to 2.2 million.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.
editor@csmonitor.com
Subscribe
Mark Sappenfield
Editor

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

Subscribe to insightful journalism

QR Code to Car brands suspend sales in Russia as ruble collapses
Read this article in
https://www.csmonitor.com/Business/In-Gear/2014/1223/Car-brands-suspend-sales-in-Russia-as-ruble-collapses
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe