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Russia's car market stuck in slow lane

Friday, October 03, 2014 - 02:18

Russian car sales have slumped by a quarter. As the world's top auto makers gather in Paris for the annual auto show, Hayley Platt looks at what impact the Ukraine crisis is having on the sector.

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When Rolls Royce rode into Moscow in 2004, Russia's car market was considered to be going places. But the ongoing troubles between Ukraine and Russia has seen the rouble tumble. Causing many to hold off on buying big ticket items, such as luxury cars. Last month saw demand for cars in Russia fall 27 percent. Sarwant Singh from Frost & Sullivan says it's tough now but things will get better. SOUNDBITE: Sarwant Singh, Partner, Frost & Sullivan, saying (English): "The bad news is sales have declined and will decline over the years until we see some sort of resolution to the political issues. But on the good side what we are finding is that we will see more growth of smaller cars, more fuel efficient cars." Car executives at this year's Paris car show have been swapping tales of how sanctions over Ukraine is impacting their business. Daimler has cut its global growth forecast by 1 percent from 4-5 percent. Blaming a cooling in Russia as well as other emerging markets too. Ford's new chief exec. Mark Fields says it will miss a profit forecast for the year thanks to higher recall costs in North America and steeper losses in Russia and South America. SOUNDBITE: Mark Fields, Chief Executive, Ford Motor Co. saying (English): "What we've seen despite a lot of progress in places like Russia, which we believe over the long term will be one of the largest markets in Europe, the economy is down so we've had to adjust and that's been part of the reason we've had to adjust our guidance, but still on a good trajectory." Despite Russia's wobbles, BMW says its sticking to its 2014 sales forecast for Europe. It says it's in talks on building a factory in Russia, but that there was ''no time pressure''. Peugeot's chief Maxime Picat says their goal is to be less dependent on Europe in the future. SOUNDBITE: Maxime Picat, Peugeot Chief Executive, saying (English): "We need to be less Europe and more international. This is one of our targets because sometimes Europe has an issue or there is a geopolitical issue in Russia and we need to have a more balanced footprint of our commercial performance if we want to be able to balance future problems and issues of a political nature in the world." The Russian car market may be looking like a dead-end for now. But it could provide a fast lane to growth in the future when Moscow and Ukraine settle their differences. And carmakers will be ready when they do.

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Russia's car market stuck in slow lane

Friday, October 03, 2014 - 02:18