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Getting up to speed - Russian and CIS automotive industry - EY - Global

Getting up to speed

Russian and CIS automotive industry

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New commercial vehicles and light vehicle sales grew by 30% and 90% respectively year over year. We expect double-digit growth in 2011, as well.

Summary: 2010 witnessed a steady recovery of the Russian automotive industry. We expect the Russian and CIS automotive industry to continue growing and believe the next few years are critical in shaping the industry's new competitive landscape.

Automotive industry growth

In 2010, the Russian automotive industry experienced dynamic growth.

  • The growth was mainly spurred by recovery of consumer confidence, government support initiatives, resurgence of consumer lending and increased demand for popular brands.
  • New commercial vehicles and light vehicle sales grew by 30% and 90% respectively year over year, backed by improved credit conditions, subsidized interest rates for the purchase of domestically produced vehicles and scrapping incentives. We expect double-digit growth in 2011, as well.
  • The component manufacturing sector may provide significant opportunities, considering the wide gap between the current state of the sector and the expected growth opportunities from the increasing localization requirements.
  • Automotive retail has been moving towards a more mature market model with the share of aftermarket services and trade-in opportunities increasing gradually.
  • The Russian Automotive Strategy 2020, approved by the Government in April, provided the framework for further development of the whole automotive industry value chain. This will help accelerate the localization process and contribute to the improved overall quality and global competitiveness of Russian-made products.

Overview of the Russian and CIS automotive industry

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