Russian car sales set to slow in 2019

©Agence France-Presse

Taxes and sanctions are likely to put the brakes on Russian car sales

Moscow (AFP) - Sales of new cars in Russia rose 2018 for a second year running but are likely to slow this year due to higher taxation and the risk of new Western sanctions, an industry group said Monday.

Russians bought 1.8 million new cars last year, up 12.8 percent on the figure for the previous year, the Association of European Businesses (AEB) said at a press conference in Moscow.

But sales in 2019 are likely to be only slightly higher at 1.87 million, representing growth of 3.6 percent, the industry group predicted.

"The pace of growth will slow," Joerg Schreiber, chairman of the AEB Automobile Manufacturers' Committee, told journalists, warning of a "difficult start to the year". 

Schreiber cited as negative factors for the upcoming months the strong sales figures for 2018 and the possibility that the United States could impose harsher sanctions on Russia. 

He also cited the fact that Russia's VAT went up 18 to 20 percent on January 1, prompting car buyers to rush to complete purchases in the last quarter of 2018.

"The increase in VAT and the possible harshening of US sanctions create significant risks and uncertainty on the market, especially in the first quarter," the AEB said in a press release.

Schroeber told AFP the prediction of growth in car sales for 2019 was based on a scenario of no "drastic changes" in government policy towards the sector.

"We believe that dedicated (Russian) government support measures are continuously needed but remain unclear for 2019," he said, citing "continued uncertainty with local industry regulation."