Car sales in Russia fell 58% in July, 56% in June

Car sales in Russia showed no signs of recovery in July, plummeting deeper than in June despite redoubled government efforts to revive the industry, an independent survey showed on Monday.

Data from the Association of European Businesses (AEB) showed car sales fell 58 percent last month compared with the same period a year ago, a slightly worse showing than the 56 percent slump seen in June.

For the first seven months of this year, sales are down 50 percent, meaning that 881,754 fewer cars have been sold in this period than a year ago, according to the AEB.

Among the biggest losers were some of the world's leading car makers, such as Toyota, Ford and Hyundai , all of whose sales fell by more than 70 percent year on year in July.

Global automotive majors had expanded aggressively into Russia over the past few years, expecting it to become Europe's largest market in 2009 as it had long been among the fastest growing.

But instead an unprecedented decline has set in, contrasting sharply with other large emerging markets. India saw demand for cars increase in July for the sixth month in a row, while China saw car sales surge 70.5 percent from a year earlier.

Brazilian motorists bought more new cars in June than any previous month in history, encouraged by a suspension of sales taxes that reduced the price of small cars by about 10 percent.

The backbone of Russia's rescue package for the auto industry has been a subsidy offered to banks for lowering the price of car loans.

But officials and car dealers have said it is failing to attract buyers in significant numbers, even though the state extended the subsidies to a broader range of cars in early July.

'We hope the actions taken by the government will start to reverse this trend during the summer, but urge close monitoring of the situation to ensure the actions are taking effect,' said David Thomas, chairman of AEB's Automobile Manufacturers Committee.

A table listing how many cars were sold in Russia by the major manufacturers can be found on the AEB Russia Web site: www.aebrus.ru.