Car price forecast for 2021 in Russia

2024 Author: James Gerald | [email protected]. Last modified: 2023-12-17 14:00

The forecast for car prices in 2021 in Russia is disappointing. Both new cars and offers in the secondary market will rise in price. It remains only to find out how much the price will rise.

Situation at the end of 2020

The coronavirus pandemic has made significant adjustments to the development of the car market. So, in March, the bulk of auto experts predicted a drop in sales of new cars by 30-50%. But at the end of the year, everything turned out to be more rosy. Sales fell on average by 10-12%, according to analysts at Otkritie Bank.

At the same time, a non-standard situation was formed:

1. Due to the danger of coronavirus infection, people more often tried to buy a new car as an alternative to carsharing or a taxi. For these purposes, they even redirected the savings that had been set aside for the summer-autumn vacation.
2. Due to the stoppage of production and problems with the import of parts, a shortage of new cars has formed.
3. The demand for used cars has grown significantly.
4. Towards the end of the year, demand for cars also increased due to the latest news about the upcoming price hike in 2021.

The picture is also complemented by the fall of the ruble, traditionally provoking a rise in prices. As a result, the prices of secondary vehicles increased by 15-20% on average.

As for new cars, for example, Lada in January, April, May and July increased the cost of production by 1%, and in October - by 2-3%. The final average increase in the value of all representatives of the automotive industry was 8-15%. And the answer to the question of whether the rise in prices will continue in 2021 is unambiguous - it is obligatory.

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Post New Year Price Predictions

Automotive expert Igor Morzharetto in an interview with Tass said that we should expect an average price increase of 2-3% from January-February 2021. These figures are not very different from the annual price increases, because none of the car dealers wants the sharp spikes that will inevitably lead to a decrease in demand. The same opinion is shared by Vladimir Bespalov, an analyst at VTB Capital. However, he emphasizes that this rise in price will definitely not be the last. The price will be influenced by 3 main factors:

1. Latest news about recycling fee. It was already raised in 2020, and the government announced plans to repeat the procedure in 2021-2022. If this happens, the price of new cars will increase by 3-5%.
2. Standard January rise in price by 1-3%. This amount will also be affected by the still incompletely compensated losses of manufacturers and dealers due to fluctuations in the ruble exchange rate. If the national currency continues to strengthen its positions in the future, prices will rise slightly.
3. Inflation. In 2021, according to preliminary forecasts of Rosstat, it will be 3.5-4%.

Avtostat executive director Sergei Udalov expects prices to rise by 10% throughout 2021. But the rise in price is unlikely to be instantaneous. Most likely, it will be broken into several waves. Therefore, the actual rise in prices will stretch throughout the year and will partially depend on the state of the market.

It should be borne in mind that the cost of imported cars, which is about 15% of the proposals on the car market, will grow faster, especially if a recycling fee is introduced. The reason is that the government will help Russian automakers offset these costs. Also, imports will be more strongly influenced by the dynamics of prices in the foreign exchange market and the development of relations between the United States and China.

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Auto Sales Forecast in 2021

According to various forecasts for 2021, the Russian car market can expect both a fall of 10% and an increase of 5%. This spread will have an impact on prices for the end user. At the same time, the worse sales from car manufacturers go, the higher the chance that profitable promotions and special offers for consumers will appear.

Experts will be able to make a more accurate forecast when several factors become clear:

1. The state of the economies of the countries of the world. This applies not only to the Russian Federation and the purchasing power of the country's residents. Depending on the state of the global auto industry, a shortage of imported new products is quite likely, and, consequently, an additional rise in prices.
2. Exchange Rates. No financial expert is able to provide a reliable forex forecast for 2021 due to the impact of the coronavirus pandemic and political instability in Europe and the United States.
3. Fighting Coronavirus. If the epidemiological situation in Russia worsens, new strict restrictions are introduced, this will be a new blow to the car market.

Accordingly, a more accurate forecast of car prices in 2021 in Russia should be expected no earlier than January-February. Then, at least, the situation with the new US President, the utilization fee and the effectiveness of vaccination in the Russian Federation will be partially cleared up.

Outcomes

1. Analysts predict an average increase in car prices in 2021 by 10%.
2. The cost of cars will rise gradually throughout the year.
3. The greatest impact on prices will have the exchange rate, inflation and an increase in the recycling fee.