Russian auto dealers are faced with a partial monopolization of the Russian car market by Chinese brands, which, in the absence of worthy competition, impose their own terms and prices on products, forcing some companies to operate at a loss. At the same time, Russian dealers cannot refuse the conditions, since they simply have no one to work with. Vedomosti writes about the problems of the industry with reference to market participants.
Dealers complain that many Chinese brands entered the Russian market and provided their cars in February at one price, but after the spring collapse of the ruble, automakers raised them, and after the exchange rate returned to 60 rubles per dollar, they refuse to reduce them again, appealing to logistical difficulties and market reasons. As a result of such actions, many Russian companies are forced to trade on the verge of business profitability.
“Dealers opened stores under the promise of low prices, but received Chinese crossovers for 3 million rubles. For example, Chery Tiggo 7 cost 1.7 million rubles in February, and at the end of April it arrived almost 3 million each. The Chinese raised prices significantly during the spring devaluation of the ruble, but after the exchange rates returned to the pre-crisis level and below, the prices did not change, ”- Aleksey Podshchekoldin, Chairman of the Board of Directors of BN-Motors, told the publication.
Another top manager of a large dealer network also speaks of losses amid a shortage of cars and high prices. By and large, dealers now have only two partners – Lada and Chinese companies, and the latter work on harsh conditions for dealers. The exception, he says, is the Haval brand, which has partially reduced the prices of some of its models so that they can qualify for preferential car loan programs. However, such examples are few and far between. The top manager claims that the average number of car sales in dealerships is now only 8 units per month, in half a year – about 50. Such a sales dynamics leaves the dealership business on the verge of profitability.
At the same time, the share of Chinese cars in the Russian market is growing against the backdrop of a general decline in sales. At the end of September 2022, they occupied approximately 14.3% of the market with a decrease in sales by 6%, to 72,233 vehicles. The top manager notes that without competition, Chinese companies impose their terms of cooperation, while dealers are forced to agree due to the lack of alternatives. Moreover, the queues for cooperation with Chinese companies are enormous: about 1,000 companies are waiting for the opportunity to negotiate with the Chinese, at the moment 827 dealers have such agreements. Given the current dynamics, market participants expect that the coming months will be "very difficult" for the company.
Chinese companies claim that although they did not reduce prices for the product range after the stabilization of exchange rates, they create conditions for affordable and profitable purchases using a system of discounts, in particular, representatives of Geely and Haval said. A Chery spokesperson said the company is doing its best to meet demand.
“As for the cost, yes, on the one hand, the course has changed, and on the other hand, logistics costs have increased and the market itself dictates such prices. To manage the final amount on the consumer's check, we have a number of marketing programs through which the client can receive significant benefits. In the near future, it is not in the interests of the consumer that we change the approach, ”said a brand representative.
According to Avtostat, in October, the share of the Russian Lada in the market was around 40%, the total share of Chinese brands was around 30%. The leaders among the Chinese are Chery and Haval with shares of 10% and 8%, respectively. Of the other market participants, Kia and Hyundai are still in the top, but this is only due to large stocks, which will soon run out. Analysts predict that a further exodus of foreign brands will lead to even greater monopolization of the Russian market by Chinese manufacturers: at the moment they are bringing cars from the crossover and SUV segment to Russia, but there is demand on the market for other categories, in which Chinese brands are still widely used. not presented.
After the start of the war between Russia and Ukraine, the Russian auto industry was one of the main victims. Production of new cars has collapsed by more than 90%, and most foreign brands and companies have left the Russian market. Since the beginning of the year, 160 dealerships have closed in Russia. For a long time, the Chinese auto industry was in no hurry to occupy empty niches, but the lack of serious competition led to the gradual capture of the Russian market.