Russia's car and light commercial vehicles (LCVs) sales in March posted 1.8% year-on-year growth to 0.16mn vehicles, after sales stalled for the first time in two years in February according to the press-release of the Association of European Businesses (AEB). 

The sales recovered after an alarming contraction of 3.6% y/y in February, which promoted fears that the slow recovery in the car market might be running out of gas due to stagnant real income growth and bringing back the memories of the car market plunge in 2015-2016. 

"The small plus in March sales, following a similarly small minus in February suggests the market is still looking for a firm direction this year," the head of AEB Joerg Schreiber commented.

After nearly five years of contraction, the sale of new cars grew for the second year in a row in 2018. In 2017, the new car market grew by 12%, and in 2018 by 13% to 1.8mn vehicles.

Previously the sales of passenger cars and light commercial vehicles in Russia in 2019 were forecasted to grow by 3.6% to 1.87mn units, according to AEB.

Cumulative sales in the first quarter are almost at prior year level, achieved through a much bigger effort by market participants as consumer demand is still lagging behind the momentum we saw one year ago, the AEB writes. Another factor helping the market out in March were government subsidies for lower-priced vehicles.

Russia's largest carmaker AvtoVaz, in the meantime, stayed resilient and continued to beat the market and grew 10% y/y in March and 4% to 0.082mn units in January–March overall.

However, Ford Sollers, a joint venture of Ford car major and car assembler Sollers, announced it will stop the production of Ford-branded cars in Russia and downsize its staff, the company said on March 27. Ford will also stop importing its vehicles to Russia, without explaining the motives for the pull back.