Russia on Track to Become Europe's #1 Market

Russia is back in business. Or so would say some people who are continuously emphasizing Russia's efforts to re-become the major European force in the auto industry. Among them, Vladimir Putin. But this time however, 2010 sales figures are the ones backing Russia's revival and, according to the Association of European Businesses (AEB), the country could reach pre-crisis levels in the next two years.

If forecasts turn into reality, Russia should increase sales of new cars and light commercial vehicles by 17 percent in 2011 to 2.24 million units from 1.91 million units in 2010, Automotive News Europe reported citing data provided by AEB. In 2012, the growth will continue with an increase of 23 percent to 2.9 million vehicles.

“We could see a 2.9 million market this year, although that possibly is a stretch,” said David Thomas, chairman of the AEB's autos committee and head of Volvo Cars Russia. “But in 2012, we will get back to the 2.8 million to 2.9 million level.”

Russia on the other hand is also supporting the rise of the auto sector and is offering an $1,600 incentive to customers who agree to trade in cars that are at least 10 years old when buying a new vehicle. The programme has received another grant to eventually reach 34 billion rubles ($1.15 billion), which should be enough to back around 690,000 sales.

“It's worth noting that more than 80 percent of sales generated by the scrappage program have gone to the lower-priced domestic brands,” said Mark Ovendon, Ford's chief in Russia and vice chairman of the AEB committee.