BMW Could Lose €150 Million in Russia Due to Ruble Depreciation

It’s been on every news station’s garter this past week and things aren’t looking up at all: the Russian currency, Ruble, is taking a heavy blow at the moment. In its biggest financial crisis since 1998, Russia is currently fighting to keep afloat.
bmw roundel 1 photo
Photo: bmw
During the past few days exchange rates have gone even down to 60 rubles per dollar and 73 of them for one Euro so things are really going downwards considering that before this crisis struck the price a Russian had to pay for a dollar was around 46 rubles. That’s a 30 percent drop and it’s starting to hit the auto industry as well.

A couple of automakers are already looking for solutions to diminish their losses. The thing is, Russians panicked and started investing in things that would hold their value better than the currency. In this regard, gold purchase has risen to new heights as well as other valuables as well. Guess what they chose? Cars, of course.

At first you might think that manufacturers would be happy to see their sales rising and in normal conditions that would be true but with the currency at such low levels they are actually taking a hit that rises to multi millions in some cases.

Case study: BMW

BMW holds Russia in high regard because they are selling strong in the world’s biggest country. Therefore, they will also be feeling the aftermath of these new movements pretty hard. According to Autonews Europe, the Germans might lose between €100 and €150 million ($123 million to $185 million) in the last quarter of the year if they keep on selling the cars at the same prices as before the ruble took a downturn.

Some manufacturers are already increasing the prices to keep the value of their products within reasonable limits. Toyota already announced that it will be adjusting the stickers for its new cars to make sure they don’t take a huge hit.

Other car makers are going to have even bigger headaches. Just think of Volkswagen, Renault or Hyundai, some of the important players on the Russian market. Their high sales volume will soon translate into huge losses as well.

Some companies decided to simply stop car sales for a period of time. Audi, Jaguar and Land Rover are just some of the brands that are no longer selling cars until the situation is fixed. Furthermore, Audi decided to stop production altogether at its plant in Kalunga from December 22 to January 12.
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