LCV market inspires cautious gazellism

At the end of November, light commercial vehicle (LCV) sales almost reached February 2022 levels for the first time. This is the only segment in the car market that shows growth in monthly terms, despite the increase in the Central Bank rate. This is facilitated, among other things, by pent-up demand. In 2024, according to market players’ expectations, the segment will continue to recover, increasing by 15%, but will not reach pre-crisis 2021 volumes.

Sales of light commercial vehicles in November increased by 49%, to 9.5 thousand vehicles, against the background of last year’s low base, follows from the data “Avtostat”. Moreover, sales of LCVs, unlike cars and trucks, are also growing compared to October – by 4%. In January-November, sales of light commercial vehicles amounted to 79.8 thousand units, which is 19% higher than last year. Let us remind you that in 2021 the market reached a record 144 thousand since the previous crisis.

“Post-pandemic high LCV sales were due to the active growth and development of the e-commerce segment,” notes Sergey Udalov from Autostat. Until February 2022, the segment was actively saturated with Ford Transit, as well as LCV Peugeot Citroen and other brands that are not currently on the market, he continues: “Currently, an alternative to such cars is still in question, because in terms of supply volumes only GAZ is noticeable.” Automotive analyst Vladimir Bespalov also points to the shortage of cars: “It is noticeable that new models are appearing, but so far this is not enough. Perhaps there are problems with supply volumes for some brands.” In November, GAZ took 53% of the market (almost 5 thousand cars). Next come UAZ and Sollers (1.7 thousand and 1.4 thousand cars, respectively), and then Lada (525 cars) and Chinese Dongfeng (176 cars).

Europlan LC adds that during the year there was a large pent-up demand due to the absence of the most popular Lada Largus model. Let us remind you that AvtoVAZ resumed production of the model in August, but there was no talk of large volumes, and in 2024 production will be moved from Tolyatti to Izhevsk. Europlan also notes that, in contrast to the arrival of a huge number of Chinese brands in the truck and passenger car markets, “nothing like this is happening” in the LCV segment. “The supply shortage, the significant expansion of online trading, the active development of transportation within the country – all this creates significant demand,” says Europlan.

They note that the increase in the Central Bank rate has a negative impact on demand, but they predict growth of the segment by 15% in 2024.

A Kommersant source in one of the automakers notes that the LCV market will be seriously hampered by a decrease in the availability of financial resources, primarily leasing as the main sales tool.

“This year, the average leasing rate has increased to almost a prohibitive level – up to 23%. As a result, small and medium-sized businesses will refuse to purchase new vehicles and raise prices for logistics services,” the expert notes.

Sergey Udalov expects market growth by 10–15%, and Vladimir Bespalov – by 15–20% (105–109 thousand cars). Mr. Bespalov notes that there is demand in the segment and sales are rather limited by the level of supply, which will gradually increase. “The rising cost of financing will be a limiting factor, but the main thing is the supply,” says Vladimir Bespalov. “The costs can be passed on to the consumer.”

General Director of VTB Leasing Anton Musatov also expects the LCV market to grow to 110 thousand vehicles in 2024. “The growth of the segment will be facilitated by an increase in the production of Russian brands GAZ and UAZ. The need for fleet expansion remains high due to the departure of European brands,” he concludes.

The 19% growth that the LCV market shows at the end of 11 months will continue in 2024, says Maxim Kalinkin, CEO of the Gazprombank Leasing group. He also talks about growing demand amid the booming e-commerce market. “The decision to purchase an LCV can now be influenced by many factors: rising costs of equipment, a possible further increase in the key rate, pent-up demand,” he concludes. Andrey Gusev from Avilon also expects that sales will grow at the current pace in 2024.

Olga Nikitina, Polina Trifonova