Market Trends of Russia Used Car Industry
Sale of Used Hatchbacks and Sedans to Surge During the Forecast Period
- The hatchback and sedan cars segment held a significant market share in terms of revenue. These segments are projected to grow further during the forecast period. The growing consumer trend toward driving flexibility is likely to increase the demand for used hatchback and sedan cars across the country.
- Russia has a major presence of car dealers, including Volkswagen AG, BMW AG, and Mercedes-Benz, and these companies are expanding their dealerships across the country. The Russo-Ukrainian war has plunged car production in Russia due to the high demand for used cars. According to the Association of European Businesses (AEB), the sales of new cars in Russia declined by 58.8% in 2022.
- Major vehicle manufacturers reopened their manufacturing plants in Russia. Renault owns a controlling two-thirds stake in the Russian carmaker Avtovaz. High demand for Renault hatchback and sedan cars across the country is also witnessing major growth.
- Besides these factors, scarcity of luxury vehicles and other premium car models and long waiting times for new models are some of the key factors that are expected to influence consumers to opt for affordable and easily available hatchbacks and sedans. For instance, Volkswagen has suspended production at its Kaluga and Nizhny Novgorod sites in 2022 until further notice. Japanese company Suzuki suspended car exports to Russia and Ukraine from its Hungarian factory, and Daimler-Benz said it lowered output to two shifts at its Hungarian plant.
- Considering these developments and the attempts to improve the sales of used cars, especially hatchbacks and sedans, these segments are expected to witness significant growth potential during the forecast period.
Understand The Key Trends Shaping This Market
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Rise in Demand for Used Luxury Cars in Russia
- The demand for used luxury cars across Russia is witnessing major growth. In February 2022, Russians bought 166 used luxury cars.
- Easy access to financing options, low entry prices, and annual maintenance contracts make the used car market more organized. The average age of used luxury vehicles coming into the market is between 2 and 3 years compared to 5 to 6 years for a mid-size or small-scale vehicle, making them a better option in some cases. Factors such as the growing consumer preference for luxury cars and the country's youth inclination toward the top brands operating in the market are expected to drive the demand for used cars.
- Countries around the world are tightening sanctions against Russia in response to the country's invasion of Ukraine, and as a result, companies are limiting, halting, or fully exiting business activities in Russia, including several automakers. For instance, in March 2022, Renault announced that it would suspend some operations at its car assembly plants in Russia due to logistics bottlenecks that have caused shortages in components.
- The decrease in new car sales indicates that the majority of consumers prefer used cars due to their own limitations, like economic difficulties and limited availability of newer models in the country. For instance, according to the Association of European Business (AEB), 55,000 new cars and light commercial vehicles were sold in Russia in March 2022. All brands, including European, American, and Asian brands, suffered losses, but the hardest hit among the big sellers were Volkswagen, Skoda, and Toyota. These trends indicate that the market for used luxury cars is projected to grow over the forecast period.
