Car market slowed down by prices – Kommersant

Car sales and their prices will continue to grow in 2024, participants say. However, they differ on specific forecasts due to the already high cost of cars and loan rates. Most players and analysts have modest expectations and assume that the market will grow by about 10%, to approximately 1.1 million cars. But a number of industry participants believe that the increased cost does not frighten buyers and the market will be able to reach volumes of 1.4–1.5 million units.

Two major market players – Geely and AvtoVAZ – presented their forecasts for car sales in 2024 during the Russian-Chinese Automotive Forum. The estimates of the Chinese and domestic concerns differed: for example, Geely expects market growth by 28%, to 1.3 million cars in 2024, and the representative of Lada – by 15%, to 1.15 million units.

The car market is recovering after a fall of 59% in 2022, when most foreign car manufacturers stopped supplies and production in the Russian Federation. Sales since the summer have even exceeded the level of 100 thousand cars per month. But prices continued to rise, including against the backdrop of an increase in recycling collection, and in November the market slowed down due to an increase in the Central Bank rate. Based on the current market dynamics and the traditionally slightly higher results of December, when customers are trying to buy a car at old prices, sales will reach the level of 1–1.05 million cars by the end of the year, says automotive expert Vladimir Bespalov

According to the results of January-October, according to Autostat, 829.5 thousand passenger cars have already been sold. Basically, everyone in the market is based on a sales forecast of 1 million cars in 2023, which is about 60% higher than 2022, but 40% lower than 2021.

AvtoVAZ with the Lada brand remains the segment leader, occupying 31.3% of the market, Geely – 8.4%. The Chinese brand is in fourth place in terms of sales after two other players from China, Haval and Chery. The last two companies failed to promptly present their expectations to Kommersant.

Other market participants and analysts have differing expectations for next year. Thus, Avtodom CEO Andrei Olkhovsky expects that in 2024 the market for new cars will grow by 20% and amount to 1.3–1.4 million units. This is similar to Geely’s expectations. And Evgeniy Eskov from Autobusiness Review believes that by the end of 2024, the car market has a chance to recover to its usual volumes – about 1.5 million cars. He believes that the main basis for growth will be provided by increased sales of Lada, as well as other local plants – Haval, Moskvich, Sollers. In addition, brands from China – Chery, Haval, Geely and others – actively expanded their dealer networks this year, introduced new products, and began to saturate segments that remained empty (for example, sedans).

“In fact, now there are still not enough cars,” says Mr. Eskov. “Prices will restrain sales, but there is demand, and supply continues to become saturated, which means the market will grow.” He adds that the market was at the level of 1.5–1.6 million cars when supply corresponded to the level of demand, so the forecast can be realized even in conditions of rising prices.

But forecasts generally suggest growth of 10%. NAPI expects that 1.12 million cars will be sold in the basic forecast in 2024, and 1.24 million in the optimistic forecast. Vladimir Bespalov gives a forecast similar to these expectations and AvtoVAZ estimates: 1.15–1.2 million cars. The analyst assumes that at the current price level, growth of 10% will be a good result. He notes that there are no prerequisites for reducing the cost of cars, even despite some strengthening of the ruble. Prices, on the contrary, will most likely continue to increase due to rising costs, Mr. Bespalov believes. “Potentially, the market should be 1.5 million units per year, but at these prices and rates it is difficult to implement. Although the supply has really increased compared to 2022 and continues to increase,” says Vladimir Bespalov.

Marketing Director of Avilon AG Andrei Kamensky agrees that in 2024, new cars will continue to rise in price: “There are no prerequisites for a price reduction yet.” According to his expectations, market volumes in 2024 will be close to this year’s values ​​- within 1 million cars or slightly higher.

Olga Nikitina