Boston, MA -- (SBWIRE) -- 08/13/2013 -- Looking at sales trends over the first four months of 2013, Russian new light vehicle sales were down by 2.2% year-on-year (y-o-y), at 862,298 units. April was a particularly poor month for the sector, with sales reportedly down by 8%, at just 245,334 units.

Although we do not expect April's sharp rate of decline to continue over the remainder of the year, we do expect overall sales growth to remain somewhat subdued. Indeed, in light of this disappointing 4M12 sales data and a fairly bearish outlook for private consumption in Russia, we are revising our 2013 sales forecast to 3% growth in the passenger car segment, down from 9% previously, and 2% growth in the light commercial vehicle (LCV) segment, down from 7% previously. Taken together, this would imply growth in the overall new vehicle sales market of 3.1%, to reach 3,121,851 units.

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BMI has long maintained that 2013 would see a slight slowdown in the annual growth levels from those seen in 2012, when light vehicle sales in the country increased by 11%, to 2,935,111 units. Despite strong yo- y sales growth in the early part of 2012, sales moderated in line with our forecasts on the back of subdued private consumption in the second half of the year.

BMI believes this erosion of private consumption will continue into 2013 as unemployment creeps upward, real wages dip, and credit growth slows. This has informed our new 2013 sales forecasts. We caution that the erosion in consumer sentiment may have a stronger impact on the light vehicle segment than we currently envisage, and risks remain firmly to the downside.

Although this represents a slightly more bearish outlook than we held in mid-2012, it is still considerably more bullish than our forecasts for many markets in Western Europe, where sales have declined markedly over the year.

In April 2013, the Russian government ordered a study to determine whether it should reinstate its subsidised car loan programme. It is unclear at this stage whether such a scheme would be similar in design to the government's previous subsidised loan scheme, which had a relatively limited impact on passenger car sales due to its small scope. BMI believes that a new car loan subsidy scheme could potentially boost sales volumes, although we do not expect this to be substantial, but this depends on the eligibility conditions of the scheme. It is currently unknown when such a scheme could be implemented.

Although the outlook for new car sales remains somewhat mixed, the outlook for local car production remains highly positive. Indeed, Russian car production continues to grow in strength. Some 2mn passenger cars were assembled in Russia over 2012, according to the Federal State Statistics Office (Rosstat), representing an increase of some 13.3% y-o-y.

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