MOSCOW (Reuters) -New car sales slumped 62.8% year-on-year in Russia in October, data showed on Monday, as falling consumer demand and sentiment quashed what had seemed to be the beginnings of a relative recovery in the embattled sector.
Sales have dived since Moscow sent tens of thousands of troops into Ukraine in February, with sanctions hindering access to parts and several foreign producers suspending operations in the country.
The Association of European Businesses (AEB) said 45,228 vehicles were sold during the month, compared to just over 120,000 in October 2021. Sales also fell month-on-month, as did those of Russia’s Lada, to 19,145 from 20,641.
“The drop in sales in October is not a supply problem,” said Evgeny Suvorov, an economist at CentroCredit Bank. “It is a result of the collapse in demand due to mobilisation.”
President Vladimir Putin on Sept. 21 ordered a ‘partial mobilisation’, causing hundreds of thousands of men to join the army or flee Russia and investment-stifling uncertainty to engulf the economy.
Retail sales extended a decline in September, while businesses in the services sector reported a sharp drop in activity. The central bank has noted a growing propensity to save among the population.
Supply issues, too, have hit Russia’s car market. The West has sanctioned the export to Russia of some materials used in car manufacturing, while production halts have further hobbled the sector.
Meanwhile, sales of used cars have been rising, with Japan accounting for more than three quarters of those imported, according to data shared with Reuters.
After the Ukraine conflict began, the AEB, which represents companies present in Russia, revised its 2022 new car sales forecast to a drop of around 50% from expected 3.3% growth.
(Reporting by Gleb Stolyarov; Writing by Caleb Davis and Alexander Marrow, Editing by Angus MacSwan)