JK Marshall Mercantile say the decline in sales of Western made cars in Russia could open a door for Chinese vehicle sales to skyrocket.
A recent report by JK Marshall Mercantile showed that, following Russia’s invasion of Ukraine and the mass exodus of western car manufacturers from Russia, sales of news car plummeted by more than 60% in March.
Data released by the Association of European Business (AEB), a body that represents foreign investors in Russia, revealed that all brands had suffered significant losses in the wake of Russia’s invasion of Ukraine. However, German brands had suffered the biggest losses with sales plummeting by more than 70%.
Contributing to plummeting car sales was the collapse of the Russian currency, the ruble, which forced the prices of new cars to increase by 35% to 45%.
JK Marshall Mercantile analysts noted in its report that Russians may be less likely to spend on luxuries like new cars as the prices of staple goods in Russia surge amid Western Sanctions imposed on Russia.
However, the losses of Western auto vehicle manufacturers may be the gains of Chinese manufacturers. The absence of foreign competition in Russia could signal a major shift in sales for big Chinese car brands.
JK Marshall Mercantile analysts believe Chinese manufacturers could capitalize on the exodus of Western car manufacturers from Russia and several may be eyeing the possibility of establishing manufacturing plants in Russia.
Over the last few years, vehicle exports from China to Russia have grown exponentially and even before the invasion of Ukraine, it had been reported that Chinese car companies were planning to manufacture some of their products locally.
“If Western sanctions on Russia were to continue for a prolonged period, there might well be an opportunity for Chinese manufacturers of cars to gain significant market share in Russia,” said Mr. Ha-Jun Seong, Chief Finance Officer at JK Marshall Mercantile.
The JK Marshall report also revealed that auto sales in China had declined in March due to harsh Covid restrictions which have resulted in targeted lockdowns in many areas of China as the country fights its largest outbreak since the start of the pandemic.
“Any gain in Russian market share would likely be very welcomed by Chinese manufacturers,” said Mr. Seong.
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