The automotive theme excites almost every Russian. Throughout the 70 years of Soviet power, only rare lucky ones could afford a personal car, but over the past 30 years the situation has changed dramatically. And now, it seems, everything is returning to Soviet realities. Novye Izvestia has already published shocking data today on how the level of car sales in the country has declined over the past 10 years. Now we give the floor to experts who will talk about the sad prospects in detail.
The international network of car services FIT SERVICE together with the analytical agency Gruzdev-Analyze conducted a large-scale study of the automotive market for the first half of the year and announced the main trends during the online conference. In particular, according to experts, the rise in prices for new and used cars will continue, dealers do not have enough original spare parts, and they repair analogues while maintaining a margin level in money, and in the near future, dealerships will try to transform into multi-brand car services in order not to go bankrupt.
According to experts, now monthly sales are in the range of 25,000 - 40,000 cars. "Survive" only on the sale of new cars for most dealers is not possible. According to various experts, sales will decrease from 55 to 64% and will be the lowest in modern history.
“The dynamics of the first week of July returned to negative values again. The June figures seemed to indicate that we had pushed off the bottom, but so far it is premature to talk about any serious positive trends,” said Alexander Usoltsev, head of the development group of the TransTechService group of companies.
“The worst predictions for car sales are coming true. In 2022, the fleet of warranty vehicles will be reduced by 1-1.2 million vehicles. Car sales this year will roll back to the early 2000s, but at that time there were fewer dealers than now,” says Alexander Gruzdev, founder of the analytical agency Gruzdev-Analyze.
According to experts, despite the catastrophic decline in sales, one should not expect a decrease in prices for new cars. In March-June alone, the growth in prices for Chinese brands amounted to about 50%, and for brands that have suspended their activities, an increase from 50% to 250%.
“Given the limited supply, we can hardly expect a price reduction. An exception may be made by Chinese brands. But only if one of the key players fails and lowers prices,” says Oleg Moseev, head of the Avtomarketolog project and member of the FreshAuto board of directors.
According to Oleg Moseev, the share of Chinese brands will definitely grow and today's 18% is far from the limit. “The thing is that now only the lazy did not go to open a Chinese car dealership, there are now queues, like on Pushkinskaya in McDonald's when it first opened. Soon every second new car sold in Russia will be Chinese,” Oleg Moseev emphasized.
“Most likely in 2022 we will see a decrease in sales of used cars by about 15-20%. At the same time, prices are likely to remain at the current level. There is a high probability of a price increase in the premium segment for cars up to 3 years old. Provided that the supply of spare parts is established,” Gadzhi Kurbanov, founder of Haraba.
However, according to Gadzhi Kurbanov, independent dealers will be even more active in this market. Including in segments in which they were not particularly noticeable before.
At the same time, all experts agree that the number of official dealers and dealer centers in the current conditions can be reduced by 40-50%.
Dealers now continue to carry the warranty, but there are timing issues. The Law on Consumer Rights regulates the period of warranty repairs and there are no adjustments towards its increase yet.
“The situation with warranty repairs is escalating and after some time it is possible that dealerships will resort to the method of “zeroing” legal entities. Already now there is a practice of refusing to accept warranty cars for service, since there are no spare parts to avoid violating the law on consumer rights,” said Oleg Moseev, head of the Avtomarketolog project and member of the FreshAuto board of directors.
As Alexander Usoltsev noted, dealers now have more freedom in using non-original spare parts. “The increase in the share of non-original spare parts in total sales ranged from 20 to 50%. At the same time, dealers are trying in every possible way to maintain the level of margin in money on non-original spare parts. The problem is that dealers have not yet learned how to sell similar spare parts and work with them,” says Alexander Usoltsev, head of the development group of the TransTechService group of companies.
“Independent car services undeniably have a head start in working with non-original spare parts, and network car services such as FIT SERVICE have a particularly big head start, but here, as always, the well-known proverb “until the thunder breaks out, the man will not cross himself” will play a role, dealers actively will go into the segment of the use of non-original spare parts,” says Oleg Moseev.
As noted by experts, most distributors have stopped deliveries and the shortage is growing. Parallel import has a point character. But there are exceptions for brands. For example, for Toyota and other Japanese brands, the situation is much better than for Mercedes and JLR. Now there is an active search for supply channels through third countries. As a result, logistics chains have grown simply to incredible proportions. It is not uncommon for customers to order spare parts themselves.
“So far, the situation with the supply of original spare parts looks depressing, and the most difficult situation is with body parts,” summed up Oleg Moseev.
According to Alexander Usoltsev, dealers can take the path of becoming multi-brand independent service stations, due to the need to retain sold used cars, in favor of which everyone will run now in order to maintain and replace income from sales of new cars.
According to Oleg Moseev, the advantages of dealers when switching to maintenance services are that they have broad connections and a large customer base. Of course, dealers need to be prepared, which will be difficult, but independent garages also need to get better. Now dealers are much more positive about the development of the service guide than the development of the segment of buying cars from the street.
According to experts, both the market and the consumer will benefit from the current situation. Of course, the market will become tougher and those who do not change will not survive.
According to Alexander Gruzdev, the total moving fleet in 2022 will decrease by 800,000 vehicles. At the same time, the aging of the park will proceed at an accelerated pace. In the next 3-5 years, the fleet will decrease by about 500-600 thousand cars per year until it reaches 25 million. At the same time, the warranty fleet will be reduced by 1-1.2 million cars.
“Dealers will suffer the most this year. Network independent car services will suffer the least. But no one will have growth, it’s just that network services have a margin of safety and they won’t sink so much,” says Alexander Gruzdev, founder of the analytical agency Gruzdev-Analyze.
At the same time, Alexander Gruzdev noted that due to the shortage of spare parts in the country, used spare parts will be actively used, car thefts for dismantling for spare parts will flourish, plus rebuilders will be added to this, those who will restore spare parts.
The survey showed that 54% of the surveyed car owners are going to save on car maintenance in one way or another. Of these, 22% will buy cheaper parts, 18% intend to repair the car themselves and 14% will look for a cheaper car service. At the same time, 44% of respondents do not plan to save on car maintenance.
According to a joint study by the FIT SERVICE network of car services and the analytical agency Gruzdev-Analyze, despite the high inflation rate, Russia has some of the lowest gasoline prices in the world. This contributes to more active use of private cars, which will lead to more frequent visits to car services.
At the same time, the shortage of spare parts increased significantly in the second quarter of 2022, when 93% of Russian car services experienced problems with spare parts. According to the forecast, the deficit level will decrease by the end of the third quarter, since the first deliveries of spare parts from Asia, Turkey and the UAE should come by this time.
“Based on the first half of 2022, it can be predicted that sales of new cars by the end of the year will not exceed 600 thousand units, thereby sales will fall by 64%. The number of warranty cars will decrease by 1 million. With a 15% reduction in average mileage compared to last year, the number of car arrivals will decrease by 2.5 million, which will lead to a reduction in approximately 2,000 car services across the country,” predicted Alexander Gruzdev, founder of the analytical agency Gruzdev-Analyze.
At the same time, according to the indicators of the international network of car services FIT SERVICE, the network's revenue, as well as all the indicators of individual stations, do not show bright crisis changes. A change in customer behavior is noticeable, in particular, a trend towards a decrease in the filling of work orders, which indicates a change in customer behavior. At the same time, the changes taking place in the market, including the availability of spare parts, do not lead to a decrease in customer satisfaction.