Russian auto sales slow as crisis hits car loans

Tue Nov 11, 2008 12:49pm EST

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 MOSCOW, Nov 11 (Reuters) - The Russian car market is
suffering from a lack of consumer confidence as the global
financial crisis spreads to auto loans, research company Nielsen
said on Tuesday.
 Every third car owner in the country - 31 percent - claims
to delay replacement or purchase of a car because of the current
economic situation, Nielsen said in a research note called Back
to the Nineties.
 "It is very likely that in 2008 the Russian automotive
market which has been enjoying fabulous growth - by 35 percent
in 2007 - will show slow down for the first time in the past few
years," said Olga Belova, a research director at Nielsen Russia.
 Russia was on course to become Europe's largest car market
this year after a decade of an oil-fuelled economic boom, but
sales figures have dropped sharply in the past three months as
the crisis forced banks to reduce cheap retail lending.
 The latest, October, data compiled by the Association of
European Business in the Russian Federation showed on Tuesday
that the growth of foreign car sales in Russia slowed to its
lowest annual pace since January 2007 [ID:nLB293352].
 The best sold foreign model, according to AEB, was the
Chevrolet (GM.N) Lacetti, a locally assembled model.
 Among the major reasons for the lack of consumer demand for
cars in October was the auto loans crisis in Russia, Nielsen
said, as banks had to halt their car loan programmes or tighten
the terms and raise rates.
 "Auto loans were one of the key drivers of the Russian
automotive market sales... Now consumers have to cope on their
own or find other additional financial sources to buy a car,"
said Yaroslav Zaytsev from Nielsen's online project Autoopros.
 "There is a big possibility that until (the) auto loans
market in Russia recovers, it is very likely that the automotive
market will return to the nineties when everything was bought on
hard cash," he added.
 The negative trend is clear, but Russian consumers are far
from being panicked. Almost half of the respondents of the
Nielsen survey said they had already bought or still planned to
buy a car despite the financial turmoil.
 (Reporting by Olga Borodina; editing by Simon Jessop)