The period of discounts on passenger cars ends with the warehouse stocks

The problem of an oversupply of warehouses of Chinese cars in the Russian Federation has almost been resolved: stock volumes have begun to decline. According to Gazprombank Leasing, inventories of passenger cars from China at the end of February amounted to almost 100 thousand cars. Along with stocks, discounts on new cars may also run out – dealers say that a number of distributors are already abandoning support programs. The situation is different in the trucks and special equipment segments, where, on the contrary, by the beginning of the construction season, inventories continue to grow.

The volume of inventories of passenger cars of Chinese brands in warehouses in the Russian Federation at the end of February exceeded 94 thousand units, Gazprombank Leasing calculated. The calculation took into account the top 16 Chinese brands, which in 2023 accounted for 49% of all cars sold in the Russian Federation and 90% of the volume of new cars imported from China. The company notes that the volume of stock, based on the pace of sales in 2023, is two to three months of sales.

The stock was formed from vehicles ordered for delivery in the fall – until demand decreased due to an increase in the Central Bank rate and an increase in the cost of financing. Importers and dealers were forced to get rid of warehouse stocks, reducing the cost through various measures, Gazprombank Leasing explains: we are talking about both direct discounts and subsidies for leasing and lending programs. By March, this policy led to a decrease in runoff volumes, the lessor notes: “The situation is leveling out.”

“The situation with warehouses is really improving, now their volumes are more or less balanced,” says Nikolai Ivanov, director of the sales department for new Rolf cars. He explains that the situation has changed, partly because distributors understand the situation in the dealer business, which “has been in the red in terms of net profit for a long time, and everyone understands that financing warehouses eats up all income.” “Many distributors heard this pain and stopped shipping until the market normalized,” he explains.

At the same time, the Chinese New Year led to a reduction in supplies, Mr. Ivanov clarifies. He believes that the abandonment of promotions and discounts will happen in the near future.

Parallel imports will begin to rise in price (we are talking about new rules for imports from the EAEU from April 1), explains Mr. Ivanov, to which prices for used cars will react first, and then distributors of new cars. “There will not be a rise in prices, but a reduction in the volume of discounts. We already see such a trend in some models,” says Nikolai Ivanov.

Renat Tyukteev, Deputy General Director of Avilon for Sales of New Cars, agrees with him. “If all dealers entered this year with two months of stock, then in March they already had one and a half months. Stocks are decreasing, including due to the Chinese New Year, when production and deliveries of cars in China were suspended,” he explains. According to Mr. Tyukteev, the demand for cars is growing and the peak of discounts will be reached in the first quarter: “Further, the level of discounts will decrease, since there are simply no prerequisites for maintaining large discounts for a long time.”

“The warehouses of dealership centers of Chinese brands are still overcrowded, as automakers continue to supply models released in 2023,” says Evgeny Zhitnukhin, head of the dealership department of the Fresh automobile marketplace. He believes that discounts and special offers will last until the end of March.

The situation is the opposite with warehouses in the segments of trucks and road construction and special equipment, say Gazprombank Leasing: their volume continued to grow in March due to fears of an increase in recycling collection. At the end of February, the inventory volume of Chinese truck brands, which accounted for 63% of the market and 95% of imports in 2023, amounted to 20.4 thousand vehicles. For special equipment, the warehouse reached 9.1 thousand units (for brands that accounted for 73% of sales and 83% of imports from China in 2023). There are also support programs from importers and dealers, Gazprombank Leasing states, but the general trend is an increase in import volumes.

General Director of the Spetsavtoprom Association Denis Kudryavtsev says that the Ministry of Industry and Trade had plans to continue to gradually increase the recycling fee for special equipment. However, now, amid the reform of the relevant department, this issue has been postponed, he believes. “The volume of imports from China is growing ahead of the launch season for large infrastructure projects,” concludes Mr. Kudryavtsev.

Vladimir Zhelobov, director of the commercial transport department at Avtodom and Avtospetstsentr, believes that the increase in truck flow from China is also not associated with an increase in recycling collection. There is excess supply in tractors and dump trucks, he explains, while demand remains unsatisfied in the vans and medium-duty segments. General Director of the Gazprombank Leasing group Maxim Kalinkin agrees that “the selection of freight transport and road construction equipment from stock is associated with the implementation of infrastructure projects,” while passenger transport “is highly dependent on the pricing policy of distributors and manufacturers.”

The Ministry of Industry and Trade told Kommersant that indexation of the tax on cars and special equipment is not being considered today, adding that they are monitoring the situation on the market, including the dynamics of imports.

Olga Nikitina