Car dealers expect car sales to grow by 30–77% year-on-year in January

At the beginning of the year, demand in the car market remained, and by the end of January, dealers expect an increase in sales by 30–77% year-on-year, according to a survey conducted by Kommersant. Some talk about an increase in traffic in salons during the holidays, despite the frost. At the same time, there is no traditional driver of demand in the form of a threat of price increases in the first days of the month – Chinese brands have refrained from this policy for the second year. But experts expect that prices will continue to rise in the future and, overall, cars will rise in price by 15–40% over the year.

Since January 1, prices for passenger cars in the Russian Federation have not increased, according to a survey conducted by Kommersant among dealers. This contradicts the trend familiar to Russian customers: until 2022, Western, Korean and Japanese brands always updated their price lists from January 1 for cars of the new model year, which contributed to the rush demand for the remains of “old” cars.

As these brands left the Russian market, this practice disappeared – price increases now more often occur not through a revision of recommended prices, but through a reduction in benefit programs from distributors. Nevertheless, buyers in Russia are accustomed to the fact that prices have been rising since the new year, and this fuels interest in purchasing, says Sergei Udalov from Autostat.

As a result, demand during the 2024 New Year holidays remained the same as in previous years, dealers say. Marketing Director of Avilon AG Andrey Kamensky notes that traffic in showrooms and calls were at the traditional level, “for some brands and segments – in particular for electric cars – even higher, as the trend for them is growing.” Director of the Rolf new car sales department Maxim Zlatokrylets also calls traffic normal for the holidays, but “30% higher than the same period last year.”

The head of the dealership department of the Fresh automobile marketplace, Evgeny Zhitnukhin, clarified that compared to December, traffic in car dealerships decreased by 30%. In December, weekly sales amounted to 20-30 thousand. “This is a normal figure for the New Year holidays,” adds Mr. Zhitnukhin. “Dealers and automakers in 2024 did not refuse special lucrative offers for those wishing to purchase a new car.” The latter is confirmed by other dealers.

Sergei Udalov believes that demand in January will, as usual, be the lowest of the year, but sales will reach a level of about 20 thousand per week – 70-80 thousand per month (in January 2023, 45.2 thousand cars were sold cars) and “the upward trend in prices against the backdrop of objective factors will continue.”

BorisHof says that 2023 cars continue to be sold on conditions similar to those in December, and “direct discounts are not provided for cars of the new model year.” Kommersant’s source among Chinese brands notes that the process of updating price lists and coordination with headquarters is long and “an increase should be expected no earlier than January 15.” A number of dealers interviewed by Kommersant are also preparing for this. Evgeniy Zhitnukhin admits an increase in prices after the New Year holidays, noting that in general, in 2024, new cars may rise in price by 20–40%, depending on the brand and configuration.

“It’s too early to talk about prices – it’s just the beginning of the working week after long holidays,” notes Avtodom general director Andrei Olkhovsky. However, he believes that prices will not be revised: “There is no reason for this, the yuan exchange rate is stable, it would even be possible to lower prices based on the current situation on the market.” His expectations for January are quite pessimistic: “Some clients will wait for additional discounts, which is justified taking into account warehouses and demand.”

At the same time, the President of the Favorit Motors Group of Companies, Vladimir Popov, notes that key Chinese manufacturers have begun to look with much greater caution at car supply plans in 2024, reducing them by almost 50% (based on a market of 1.1–1.2 million, which is comparable to analyst estimates).

“All Chinese companies are unanimous in the opinion that reducing prices is impossible with the current formula for its formation: the price of a car in China from the factory plus duty plus recycling fee plus delivery plus dealer margin,” explains Mr. Popov. “In this formula, the amount of payments to the state and logistics account for at least 65%, and the dealer’s margin does not exceed 3.5% today. Thus, with the average price of a mass-produced car on the Russian market being 2.5 million rubles. in China they buy it at the factory for $9.38 thousand, and everything else is actually a quasi-tax in the Russian Federation and logistics costs.”

The dealer expects prices to rise by at least 15% in 2024: “All warehouse sales were carried out by dealers in December 2023, when they, having sold stock, returned expensive money to the banks, rather than using it to buy out new lots.”

Olga Nikitina