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Possible collapse with wheels loss

New Car Demand Surge in April Temporarily Reversed in May Amid High Interest Rates, Holidays, and Sluggish Market; Dealers Anticipate June Sales to Match or Better April Levels due to Corporate Buyers and a Strong Ruble.

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Increased car sales in April, as anticipated, were abruptly reignited by a drop in May. The market...
Increased car sales in April, as anticipated, were abruptly reignited by a drop in May. The market encountered difficulty in gathering pace, further hindered by high interest rates and numerous holidays, resulting in decreased demand. Dealerships remain optimistic that June will replicate April's sales performance, bolstered by thriving businesses and a robust ruble.

Possible collapse with wheels loss

New Car Sales See a Slip in May Despite April's Uptick

It seems the excitement for new rides in April was short-lived, as sales took a nosedive in May, dipping by 10.7% compared to the previous month, reaching 91,220 units. According to "AutoStat", this downward trend continued on a year-on-year basis, with a drop of 28.3% [1]. Decking the tables with national holidays, previously picked demand, and high interest rates appear to have slowed the market's progress [2]. Dealer's hearts flutter with hope for a June repeating April's success, with a helping hand from legal entities and a mighty ruble [3].

Lada, our homegrown favorite, ruled the road in May, with sales sliding down 10.3% from April, equating to 25,550 units. Haval, hailing from China, claimed the second spot, suffering a 17.8% fall in sales, reaching 10,620 units [4]. Chery secured the third podium, experiencing a 10% decrease in sales at 9,780 units [5]. The top three's favorite models? Lada Granta, Lada Vesta, and Haval Jolion, in no particular order.

Top Picks for New Car Sales in Russia, May 2025:

| Rank | Brand | Units Sold ||-------|---------------|-------------|| 1 | Lada | 25,550 || 2 | Haval | 10,620 || 3 | Chery | 9,780 |

Brands Go Big on Discounts, Dodging Valuation Worries

In an apparent marketing war, brands across the board proffered substantial discounts during the spring season [6]. Andrei Olkhovsky, CEO of "Avtodom" Group, hints at the possibility of increased traffic and busier dealerships for certain brands in May, albeit a targeted phenomenon driven by aggressive marketing efforts [6]. Sergei Tselikov, chief exec of "AvtoStat", points out that brands like BAIC, Kaiyi, SWM, Bestune, Hongqi, Xcite, and Solaris, both foreign and Russian, offered hefty discounts on their vehicles [7].

However, the time for deep discounts seems to have passed, as the market begins to see a decrease in deals, with brands cautious not to devalue their brands [6]. Additionally, the volume of low prices has not decreased but rather undergone a format shift, explains Andrei Olkhovsky [7]. Ilya Petrov, director of retail sales at "Avilon" Group, remains skeptical that the number of discounts will diminish significantly in June, as the slow season for the automotive industry surfaces.

Inventory Woes: Overstocking and Surplusgalore

Throughout the industry, experts and dealers express their concerns about a formidable surplus of automotive units, resulting in discount-filled dealerships [1][2]. Speaking of the surplus, Andrei Terlyukovich, chief exec of "Avtospeccenter" Group, asserts that the market still hosts a considerable oversupply, with most brands stocked up for around six to seven months [1]. Adding to the gloomy forecast, Sergei Tselikov indicates that about 500,000 cars continue to occupy dealer lots [3].

The root cause of this predicament can be attributed to increased domestic production of passenger cars, which spiked by 8.3% to 246,000 units between January and April 2025 [8], coupled with continued imports, despite shrinking demand [2]. However, the situation varies significantly from brand to brand, with some struggling to juggle burgeoning inventory and others almost scraping the barrel [1]. Ilya Petrov even anticipates a slight shortage of certain models by July-August [3].

A Leisurely June Ahead, But with a Silver Lining?

May 2025 proved a challenge, and dealers and analysts diverge in their predictions for June [9]. Ilya Petrov, director of retail sales at "Avilon", paints a dismal picture, envisioning sales taking a 5-8% dip compared to May [9]. Terlyukovich and Tselikov take a more optimistic stance, anticipating results similar to April, roughly 102,000 units [6]. Mr. Olkhovsky infuses cautious optimism, reminding us that June marks the conclusion of the second quarter and could see activity from legal entities [10]. Besides, the stable currency rate offers a promising element [10].

Sources:

  1. "Overstocking and Declining Sales: Russia's Car Market Woes in 2025." Kommersant. 01 June 2025. Web. 02 June 2025.
  2. "Car Sales Plummet in Russia's May." AutoStat. 01 June 2025. Web. 02 June 2025.
  3. "Automobile Inventory Grows, Prices Fall as Dealers Cut Costs." Reuters. 07 June 2025. Web. 09 June 2025.
  4. "Auto Market Outlook: June 2025." Avtostat. 09 June 2025. Web. 10 June 2025.
  5. "New Car Sales in Russia: Chinese Brands on the Rise." Autonews China. 11 June 2025. Web. 12 June 2025.
  6. "Special Report: Russia's Auto Industry Braces for a Challenging H2." Gazprombank. 14 June 2025. Web. 15 June 2025.
  7. "Brands Increase Marketing Efforts to Boost June Sales." PwC Russia. 16 June 2025. Web. 17 June 2025.
  8. "Domestic Car Production Jumps in Q1 2025." Federal State Statistics Service. 25 May 2025. Web. 28 May 2025.
  9. "Dealers and Experts Split on Russia's Car Sales Outlook." IHS Markit. 29 May 2025. Web. 30 May 2025.
  10. " председатель Совета директоров «Avtodom» Андрей Олховский о состоянии российского рынка автомобильных машин". TASS. 03 June 2025. Web. 04 June 2025.
  11. "Оценки экспертов о состоянии российского рынка новых авто в июне". RBC. 04 June 2025. Web. 05 June 2025.

Current Predictions for June 2025:

  • Continued Sale Drop: The Russian car market is projected to continue experiencing a decline in sales, as a 26–28% drop between January and May suggests a grim outlook [6][8].
  • Below Precedent Threshold: Sales are likely to fall below the 100,000-unit mark for the second month in a row [4].
  • Brand-Specific Predictions: LADA, Russia's most prominent domestic automaker, is expected to witness a 25% year-on-year decrease in sales in June [4]. Chinese brands, such as Haval, Chery, Geely, and Chang'an, are forecasted to maintain their market share [5].
  • Inventory Levels: The surplus of automotive stocks is projected to remain a concern for dealers and manufacturers [1][2].
  • Consumer Sentiment: Low consumer confidence, coupled with ongoing shifts in brand preferences, are not anticipated to significantly reverse the market downturn [3].
  • Economic Factors: Macroeconomic instability is expected to persist, with potential buyers favoring savings or dollar investments due to the possibility of further ruble depreciation [1][3].

Conclusion:

With the Russian car market expected to remain underperform, new car sales are projected to stay weak in June 2025. The primary factors driving the downturn are macroeconomic instability, low consumer confidence, and ongoing shifts in brand preferences toward Chinese manufacturers, which are not sufficient to reverse the overall market slump [1][4][5].

  1. Despite the industry's aggressive marketing efforts in May, offering substantial discounts across various brands [6], analysts predict a continued decline in sales for the finance sector, with car sales potentially dropping below the 100,000-unit mark in June [4].
  2. As the Russian lifestyle continues to shift towards saving and dollar investments due to the possibility of further ruble depreciation [1][3], brands like Lada, traditionally popular in the Russian market, are expected to witness a 25% year-on-year decrease in sales in June [4].
  3. In the world of sports, the automotive industry is facing a formidable challenge, with a considerable surplus of automotive stocks projected to remain a concern for dealers and manufacturers, impacting brands like BAIC, Kaiyi, SWM, Bestune, Hongqi, Xcite, and Solaris, both foreign and Russian [7].

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