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South Korean Automakers Make Big Gains in Russia

Demand for new cars in Russia has fallen by 30 percent since the beginning of the year, but domestic production has helped South Korean and Japanese automakers to increase their market share in Russia

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Originally appeared at Russia Beyond the Headlines


Domestic production and cost competitiveness have helped South Korean automobile manufacturers become the leaders in the Russian new car market.

In the first nine months of 2015, South Korean manufacturers had a 23.2-percent share in the Russian market, up from 19 percent in 2014. Hyundai Solaris was the most popular foreign brand in Russia, with 85,500 cars being sold in the country in this period. 

Japanese brands were in second place with a 22.5 percent market share, while Russian cars had a 19.4 percent market share.

Demand for European cars fell by almost by 40 percent. A year ago, German cars had a 14.2 percent market share, which has now fallen to 13.5 percent.

Fall in new car sales

According to the Avtostat analytical agency, 1,100,000 new cars were sold in Russia in the first nine months of the year, which is a third less than in the same period a year ago.

Car manufacturers that “were not able to launch local production before the crisis chose to minimize their presence in Russia,” says Nikolai Stepanov, regional director of the Russian AutoMotoClub (RAMC).  He takes the example of Honda, which he says, “still imports 100 percent of its cars to Russia,” and “whose sales dropped to a few dozen cars a month.”

Price competitiveness

In 2015, the average price of the Korean brands increased by 10 percent from a year ago, but European and Russian manufacturers increased their prices even more.

Sergei Baranov, editor-in-chief of AutoBusinessReview magazine, says the price of the Renault Logan increased by 25 percent, while that of the Skoda Rapid and Lada grew by 18 and 17 percent, respectively.

"As a result, two models alone - the Hyundai Solaris and the Kia Rio - make up 14 percent of all cars sold in 2015," Baranov says. He adds that the two companies, which are operating at a loss, may increase their prices if the ruble strengthens.

Pavel Martynyuk, an analyst at the National Rating Agency believes that in 2016, the South Korean manufacturers will maintain a market share of 21 to 23 percent.


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