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They Go For & Nbsp; Rubles: Will Cars Rise In Price Due To The Collapse Of The Ruble And By How Much

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They Go For & Nbsp; Rubles: Will Cars Rise In Price Due To The Collapse Of The Ruble And By How Much
They Go For & Nbsp; Rubles: Will Cars Rise In Price Due To The Collapse Of The Ruble And By How Much
Video: They Go For & Nbsp; Rubles: Will Cars Rise In Price Due To The Collapse Of The Ruble And By How Much
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The consumers did not have time to recover from the first increase in prices for new cars at the beginning of the year due to the increase in waste collection, as the next increase is not far off. Further weakening of the ruble against the euro / dollar may provoke a rise in the price of cars. At the same time, against the background of an unstable economic situation, the demand from consumers who are trying to preserve their savings has already aggravated. But, as players and industry experts expect, the buying rush will not last long and may be replaced by a sharp drop in sales in the Russian car market.

What happened

At the end of last week, the OPEC and OPEC + countries (Russia, Kazakhstan, Azerbaijan) could not agree on the terms of a deal to reduce oil production. Against this background, on March 9, there was a one-day - the strongest since 1991 - drop in Brent oil prices to $ 35 per barrel, which led to a sharp weakening of the ruble against the euro / dollar pair. At the opening of trading on March 10, the value of the dollar on the Moscow Exchange soared to 72.99 rubles. (+ 6.44%), euros - up to 85 rubles. (+ 9.66%). During the day, the rate corrected, the Central Bank of the Russian Federation on March 11 set 72.02 rubles. per dollar (+ 4.5%) and 81.85 rubles. per euro (+ 6.01%). How does this threaten the Russian car market?

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What car dealers are waiting for

Most of the market participants surveyed by Avto.ru believe that in the event of a prolonged weakening of the ruble against the euro / dollar, prices for new cars will certainly grow… The press service of Avilon AG reported that the cost of cars correlates with the value of the currency, and the change in the ruble exchange rate directly affects prices. Denis Petrunin, General Director of the AutoSpecCentre Group of Companies, notes that automakers have already begun to revise prices. The process will end this week, and next week we will be able to see the first changes.

“Car prices react to the dynamics of the exchange rate with a long delay, now the growth will not exceed 3-5%,” he added. But further price increases, according to those polled by Avto.ru Magazine, will depend on the economic situation in the country and on how long and how much the ruble will lose its position in relation to the euro / dollar.

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If the situation does not change in the coming weeks, then it is worth waiting for the next round of price increases for all cars, which usually occurs during the year, the press service of Avilon notes.

At the same time, the next rewriting of price lists can significantly worsen the demand for new cars. Rolfe confirms that further market dynamics will depend on the level at which the ruble exchange rate is fixed. “After meeting the demand in the market, there may be a lull and [as a result] reduction of the car market by 12-15% in 2020", - predicts Petrunin.

Rising prices spurred interest

In anticipation of a further depreciation of the ruble, Russians have already rushed to stores and car dealerships to save their savings. Petrunin of AvtoSpecCentre compares the current situation with the fall of 2014. Then, in addition to the surge in purchases from the Russians, cars came to Russia even from neighboring Kazakhstan and Belarus. "In 2014, the rush demand for cars against the background of the expected rise in prices lasted six months, by February 2015 the demand was satisfied, in 2015-2016 the market was shrinking and only in 2017 showed growth," recalls Petrunin.

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A similar situation, in the opinion of a number of players, may repeat itself now - in the event of a further depreciation of the ruble and even if the current exchange rate remains unchanged.

Development Director of the company "Rolf" Vladimir Miroshnikov already notes significant increase in traffic to dealerships… “Clients strive to buy cars at current prices, to outstrip the likely price hike.This applies to both new cars and used cars,”he says.

The press service of Avilon confirms that after the first leaps of the ruble against the bi-currency basket, a revival of demand is observed in the salons. At the same time, Petrunin from "AutoSpecCentre" says that a real excitement should not be expected, since the population's debt burden is already high, and people have little free money.

What automakers think

The sharp drop in the ruble raises concerns among both domestic and foreign producers. At the same time, they do not yet disclose specific plans for pricing policy. AvtoVAZ and Renault assess the current situation - the decline in oil prices, fluctuations in the ruble exchange rate and the cost of raw materials - as negative for the Russian automotive industry in general and for individual manufacturers in particular. According to a representative of AvtoVAZ, the plant is one of the most localized manufacturers in Russia, but it is still influenced by the prices for raw materials and products of some suppliers, denominated in euros or US dollars. Both manufacturers are considering price adjustments for their products and welcome the expansion of government support to the car market to mitigate the effects of the economic downturn.

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Chery is still analyzing and assessing the current situation. BMW told RIA that they would be forced to raise prices if the situation with the ruble did not change. “If such a course is fixed for a long time, then, of course, we will be forced to raise prices,” the agency's interlocutor said.

What predictions do experts give

The car market will be one of the first to feel the deterioration of the economic situation due to its strong dependence on exchange rates. “However, until the rates are fixed at one stable level, there is still no need to fear a sharp jump in prices. Car dealers still have a certain reserve of cars at old prices, and as long as there is warmed up demand, the price tags for them, most likely, will not be revised,”Ilya Zharskiy, managing partner of the Vet Expert Group, believes.

Maxim Khudalov, director of the ACRA corporate ratings group, believes that cars may rise in price by 5-7%, and this will affect everyone, since many auto components are imported from abroad. In addition, a certain deficit remains due to quarantine in connection with the coronavirus. KPMG is also convinced that domestic cars can rise in price due to the growth in the cost of imported auto components. Zharsky from Vet predicts growth in the cost of new cars in the range of 7-20%, but this will happen, according to him, not earlier than in 2-3 months, when a clearer picture of exchange rates appears.

“A change in the ruble exchange rate by more than 10% is a very significant risk factor for car manufacturers. Already, many of them are ready to adjust their price lists if the situation on the foreign exchange market does not improve,”says Sergei Baranov from JATO Dynamics. However, the rise in price will be smooth anyway. “All brands have at least a month and a half stock of cars in warehouses, the same stock of components is available at Russian car factories, that is, until the end of spring, a sharp jump in prime cost and retail prices should not be feared. During March, an adjustment within the range of 2-3% percent is possible. If then the ruble rate returns to its previous values, then there will be no further rise in price, and the conditions for customers will become more profitable due to additional discounts. If the ruble continues to fall, then the rise in prices is inevitable by the summer,”the analyst notes.

A sharp change in the ruble exchange rate will also affect the demand for cars. “We should expect a reduction [in demand], given the already existing limited purchasing power of the population, which will continue to decline as inflation rises. I think that the decline in demand will be in the region of 5-10% per year,”predicts Maxim Malkov, director of the practice for work with companies in the automotive industry at KPMG in Russia and the CIS.

Khudalov from ACRA also expects a decrease in sales on the domestic market, but hopes for some compensation in volumes due to exports. “In general, the forecasts for 2020 were already disappointing - the fall that began in 2019 will continue in this one, but due to the next devaluation it will be more tragic for both manufacturers and buyers, whose wallets will become even more scarce”, - said Zharsky from Veta, predicting a decline in the car market by 3-4%.

According to monitoring by JATO Dynamics, in January-February retail prices for new cars have already increased by 2-5%, depending on the brand. “Inflation in the automotive industry cannot be stopped: the weighted average price on the Russian market is steadily adding 7-8% per year. Taking into account the economic situation in 2020, the growth may turn out to be over 10%,”concludes Sergey Baranov from JATO Dynamics.

“Even localized car production in the country depends on currency fluctuations, albeit not as strongly as imports. However, the current situation differs from 2014 - a surplus of the trade balance and budget, a reduction in external debt and increased reserves have made the country's economy more resilient, '' said Alexei Mukhanov, a leading analyst at Avto.ru. - The automotive market has also been optimized, the number of brands and dealerships has decreased, production volumes and stocks have decreased. In addition, currency quotes have grown far from historic highs."

However, the jump in exchange rates will certainly lead to higher prices for new and used cars, Mukhanov said. First of all, the prices will be forced to raise the importing brands - by an amount commensurate with the fall of the ruble against the base currencies. That is, by about 10 percent. Brands that have localized production in Russia and are less dependent on imports will also revise prices upward - according to forecasts of Avto.ru analysts, by about 5 percent. However, the increase will not happen all at once, but will be extended over time. In addition to the obvious rise in prices, one can expect an increase in prices for new cars due to a decrease in dealer discounts and the imposition of additional equipment by sellers.

However, as analysts of Avto.ru note, all these assumptions are true if the rate remains comparable to the current level. If, in the short term, the price of the dollar drops below 70 rubles, then a significant rise in price may not happen. But if the ruble continues to depreciate, then the rise in prices for new cars by the end of the year may reach 20 percent.

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