Avtovaz expects Russia's car market to drop 25% in 2025 amid further rise in key rate

MOSCOW. Nov 19 (Interfax) - Russia's market for passenger cars and light commercial vehicles, which should reach 1.7 million vehicles in 2024, could drop about 25% in 2025 amid further hikes in the key rate of the Central Bank of Russia, Avtovaz said.

Avtovaz president and CEO Maxim Sokolov told reporters on the sidelines of Transport Week on Tuesday that the company sees a clear slowdown in the market in November, which is under pressure from high rates. Sokolov said that the market was 40% lower in the first half of November than what the company had previously forecast for the month.

"We see a slightly smaller drop within 25%-30% of our plans for November in terms of our sales in the month. Approximately equal figures are expected if we compare to November last year although a lag is already emerging. Therefore, I would not speak now in a verified manner about the sales volume for the year, for the market overall, and for our brand. We still need to work through these one-and-a-half months," Sokolov told reporters.

"Much will depend on the decision and signals from the Central Bank regarding a possible increase in the key rate," he said.

"We see that the Central Bank's targeting has reached its goal now, and customers are moving from car dealerships to banks, placing their funds in deposits, which, of course, will certainly negatively affect the market and production plans in the medium term. This is because it is simply impossible to maintain the production rates next year that Avtovaz has demonstrated over the last two to three years amid such a key rate," Sokolov said.