Russia will encourage car sales and try to export more

Significance

New car sales in Russia are rising for the first time since 2012 with a 5% year-on-year increase reported for January-May. Despite the automotive sector slump of 2014-15, most foreign companies with existing manufacturing or assembly capacity have taken the long view and remained in the market.

Impacts

• Russian-badged cars will remain market leaders due to their affordability.
• Growth in local automobile manufacturing will provide additional impetus to related sectors such as metallurgy and chemical industries.
• Energy ministry projections that Russia might have 200,000 electric vehicles by 2020 seem overly optimistic.