But since international sanctions were imposed in early 2014, the market has fallen precipitously, dropping 49 percent to just over 1.4 million units sold in 2016. Contrast this to the U.S. new vehicle sales data, over 17.6 million units were sold in 2016. According to E&Y, total vehicle sales in Russia may top 2 million units by 2020. The same E&Y report points out that with still very limited amounts of vehicle ownership, there is immense potential for future sales growth.
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What the Russian market lacks in volume today, it makes up for in diversity. Whereas in the 1970s and 1980s, choices were limited to brands like VAZ, GAZ, ZAZ and LUAZ, modern Russia offers brands from across the globe. In 2016, 57 globally recognized brands sold more than 328 distinct models inside Russia.
The top 10 brands in Russia make up 75 percent of new vehicle sales. Not surprisingly, VAZ (popularly known as Lada) leads the market with an 18.7 percent share. Kia and Hyundai come in at 10.5 percent and 10.2 percent, respectively. Renault (8.2 percent), Toyota (6.6 percent), Volkswagen (5.2 percent), Nissan (4.9 percent), top out the top seven. GAZ and Skoda each claim 3.9 percent for eighth and ninth place, while UAZ claims the tenth spot with 3.4 percent market share.
Amongst the many changes taking place in Russia since the early 1990s, consumer choice has been the biggest beneficiary. AutoVAZ joint ventured with Fiat in 1966 to create the Lada. The Lada is a small, popular car that dominated Russian sales for 45 years until 2016.
Though the Lada nameplate still held the highest market share, the bestselling individual model of 2016 was the Hyundai Solaris. This was big news for Russian consumers. After decades of near total domination, Russian domestic brands represented only 26 percent of sales in 2016, which is their lowest market share total to date.
Russian-manufactured vehicles represent more than half the vehicles currently operating in Russia. But since the end of the 2009 recession, foreign nameplates, like Hyundai and Kia, have made significant in-roads. By 2020, it is estimated the Russian brands will only make up 40 percent of the total vehicles in operation, and will continue to decline in market share until they reach their sales share, which is currently 26 percent.
There is no reliable estimate for the average age of vehicles in Russia. Strong demand coupled with a strong economy in the 2000s put many new vehicles on the road. The post-recession boom in 2010 and 2011 means those vehicles should now be entering prime repair years.
The Russian government also has an interest in getting older vehicles off the road. A scarcity of vehicles in the early post-Soviet era meant many older cars seldom got scrapped. Instead they remained operational, often with massive safety and maintenance issues. In 2010, the government ran a very successful scrappage program, which resulted in 180,000 vehicles being scrapped in exchange for a new vehicle. Almost 80 percent of those sales were made by Lada.