Russian car sales up 31 percent y/y in May : AEB

MOSCOW (Reuters) - Russian new car sales growth accelerated to 31 percent year-on-year in May, boosted by a government scrappage scheme and a broad economic recovery, data from the Association of European Businesses showed on Tuesday.

Sales for the year to date are still 5 percent below the same period in 2009, the data showed, but a disastrous January and February have now been followed by three straight months of growth from March.

“The current trend indicates that the market will be in growth on a year to date basis for the second half of the year,” David Thomas, Chairman of the AEB’s Automobile Manufacturers Committee, said in a statement.

The Russian car industry is in recovery mode after annual sales halved amid the global economic crisis in 2009. The AEB said some 157,937 cars were sold in Russia in May, a slight decrease on sales of 163,299 units in April, partly reflecting May’s public holidays.

The upturn coincides with a state backed scheme to offer 50,000 roubles ($1,718) for trading in locally made vehicles over 10 years old -- a scheme set to receive an extra $340 million from the government, it was announced this week.

The program has been most beneficial to Russia's flagship Lada brand AVAZ.MM, which sold more than four times its nearest competitor in May and was up 62 percent year on year.

Thomas said he thought it time the scheme was extended to cars made overseas.

“The scheme continues to have the greatest impact on the cheapest end of the market and I would urge the government to expand the scheme to all cars,” he said in a statement.

Thomas also runs Ford-owned F.N Volvo in Russia. Renault RENA.PA, which owns 25 percent of Lada-maker AvtoVAZ, Volkswagen VOLG_p.DE, GM Group GM.UL and KIA 000270.KS are the other biggest market players in Russia, according to the AEB.

Reporting by John Bowker and Toni Vorobyova; Editing by Dmitry Sergeyev