Russia Tanks

Bertel Schmitt
by Bertel Schmitt

Remember the BRIC countries, saviors of the auto industry? Brazil, Russia, India, China. Brazil (+11.35 percent,) India (+18.7 percent) and especially China (+45 percent) performed as advertised. But Russia? Russia’s car 2009 car sales are such a disaster that BRIC will stay BIC for the foreseeable future.

Russia’s new car sales tanked by 49 percent in 2009 to just 1,465,917 units, according to data of the Association of European Businesses in the Russian Federation.

Martin JAHN, Vice Chairman of the AEB Automobile Manufacturers Committee hopes that the hemorrhage can be contained this year: “We expect that in 2010 the market will reach 1.4 million passenger cars or 1.5 million, including light commercial vehicles. This forecast is quite optimistic and is based on the expectation that the state support measures – subsidized loans and the scrappage incentive – will be effective enough.” In other words he doesn’t believe what he says.

Among the top ten models of passenger cars in 2009, nine are produced in Russia, but most carry foreign name plates.

Best sellers are Lada, followed by Chevrolet, Ford, Hyundai, Renault, Kia, and Toyota. Full data here. Refer to TTAC’s roundup of 2009 sales data for a continuously updated roundup of 2009 sales data from around the world.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Mr Carpenter Mr Carpenter on Jan 15, 2010

    Russia is such a corrupt place in every sense of the word, that such a result is nearly inevitable. Ever consider why Mexico - which is a large North American country along with the United States and Canada - is such an economic basket case in comparison? Corruption is pandemic. Or why once prosperous Argentina and Brazil didn't do as well as the USA and Canada when they are large, have lots of resources and similar population numbers? Argentina was especially thought to be well positioned for 1st world status early in the 20th century and it didn't come to pass. Why? Pandemic corruption. This is what concerns a lot of people about what the US is becoming. A great big "Chicago thug town" filled with corrosive pandemic corruption. Slowly, like rust on a 1960 Edsel sitting in a woods, it's taking hold. It's even to the point that we have ex-American Presidential candidates openly wondering if our form of government is sustainable, it's gotten that bad. http://www.wnd.com/index.php?fa=PAGE.view&pageId=122030

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    • Psmisc Psmisc on Jan 15, 2010

      @no_slushbox "But that’s also true of China; if China became a democracy it would probably collapse just like Russia." Well, China was democratic under ROC before the communists took over, it was pretty corrupt but eventually got better. I'd say after the retreat to Taiwan they had to start over from a worse situation, but eventually exceeded the mainland economically. But then again, during the late 50s the ruling faction in the communist party were ready to experiment with market economy and was warming up to the west, but Mao crushed it with the cultural revolution, so the mainland was two decades behind the game.

  • FromBrazil FromBrazil on Jan 15, 2010

    Besides other reasons (as pointed out above), Russia tanks when oil prices go down and soars when up they go. As to Brazil, yes I believe it's in another league compared to India and China, and even Russia. BRIC was made up to call attention to the fact that these were developing countries that were growing rapidly. There's nothing else in common. I mean, only Brazil and India are democracies. And thus both will grow at a slower pace than the others (as the executive branch cannot rule by fiat). Both India and Brazil have trouble regarding corruption and some indefinitions in the judicial area (slowness, justice can be bought sometimes, etc.), but both are for the most part States of Law (Russia and China have much more trouble in this). However, Brazil has none of the cultural baggage of India relating to people's economic expectations nor religious or racial strife. India though has many more multinationals than Brazil, not to mention engineers and scientists. Russia's and China's problems are well known and probably too long to talk about here. A point of interest though is that, though Brazil will always seem to drag behind the others in terms of growth (5% is excellent for Brazil, comparing to China's common 10+% or India's and Russia's 8%) that's because it's per capita income is higher than the others (Russia's maybe not, but this one is "distorted" by oil revenues). Many economic surveys show that it's much easier to grow from low per capita to mid per capita than from mid per capita to high per capita income. As Brazil is already mid per capita the challenge is to improve education and thus gain a base for suistanable growth (a decade or so of 3 to 5% growth would transform this country).

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