The fleet and lease sector in Russia over the past few years has experienced exhilarating highs and depressing lows, like the Russian economy in general and the automotive industry in particular, and the stage is set for renewed growth, says Sergey Zykov, general manager at Fifth Wheel Management, in an interview with Fleet Europe.
Not so many years ago, Russia seemed destined to become Europe’s biggest car market, with close to 3 million units sold annually. But that was before the crash of 2013-16. In 2018, automotive sales in Russia managed to recover previous losses to a large extent. According to official figures released by the Russian Ministry of Trade, new-vehicle sales were up for 12 straight months last year, and totaled +12.8% for the whole of 2018, reaching a total of 1.8 million units. That gives Russia the 5th place in the European ranking, behind Germany, the UK, France, and Italy.
According to automotive statistics and analysis providers Autostat, fleet sales represented 13% of total sales, i.e. around 235,000 units. While that percentage has remained stable for a while, renewed market dynamism means that the absolute figure has increased significantly. As recently as 2017, half-year corporate new-car sales in Russia, while also representing 13%, only amounted to 82,645 (roughly 165,000 on an annual basis).
Growth will continue in the new year, says Zykov, “but not at the rate of 2018: there has been a VAT increase from 18 to 20% at the start of the new year, which has had a dampening effect on sales. Also, the exchange rate with the U.S. dollar and the euro has worsened. In 2019, new-vehicle sales are expected to grow by no more than 5% – and I expect that figure to be commensurate for corporate fleets.”
The Association of European Businesses is slightly more pessimistic, predicting growth of 3.6% to a total of 1.87 million new cars sold for 2019.
As for Fleet Management, Zykov does not foresee any major changes in the year.
“Various interventions from the business community have managed to prevent the introduction of a set of legislative measures which would have introduced strict rules for fleets. That would have changed the fleet environment considerably; but following the rejection of that change, not much will be different this year in the practice of Fleet Management in Russia.”