OEMs and suppliers are remaining cautiously optimistic that the Russian automotive marketplace will eventually recover despite being rocked by a plunging ruble and a “bloodbath” of plummeting vehicle sales. Its economy continues to be pummeled by a series of serious setbacks that include free-falling oil prices and tough sanctions from the U.S. and other Western nations over Russia’s incursion into Ukraine.
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Drastic production reductions and layoffs have been implemented amid January’s 24 percent drop in overall new car sales followed by a devastating 38 percent decline in February. Some manufacturers have upped vehicle pricing as they attempt to stay the course after years of routing heavy investments into Russia’s automotive sector.
“We believe the Russian market likely has significant potential in the longer term. In the short term, however, it remains an extremely volatile and challenging market,” says John Gardiner, director of news operations for Ford of Europe.
“It’s important to remember that even today Russia is one of the largest markets in terms of vehicle sales in Europe – currently No. 5, down from No. 3 at the end of 2014 – with the potential to be the largest in Europe at some point in the future. So, it’s important to maintain a strong presence in the country,” he tells Aftermarket Business World.
“This is why we’ve continued to invest to expand the Ford portfolio in Russia to fill new segments and deliver vehicles tailored to meet the needs and wants of Russian customers,” says Gardiner.
“For example, last year Ford Sollers announced that it would launch six new vehicles in Russia over the following 18 months, and to-date out of the six – EcoSport, Transit, Focus, Mondeo, Mustang and Fiesta – we have launched the EcoSport and Transit. This positive product momentum will put us in a better position to thrive when the market recovers,” he says.
“Given this,” Gardiner elaborates, “we’ve been working intensively with our partners in the Ford Sollers Joint Venture in every area of the business to reduce costs, match production to the real demand, manage the difficult pricing environment, and to limit the financial impact of the current crisis – and we’re continuing to work with them on a daily basis to manage the situation and take the necessary action to respond to circumstances.”
Russia’s dire monetary situation has been in crisis mode for months on end, prompting Renault Nissan CEO Carlos Ghosn to declare in an interview aired on the BBC that “when the ruble sinks it’s a bloodbath for everybody. It’s red ink, people are losing money – all car manufacturers are losing money.”