Ruble crash drives VW's SEAT out of Russia: report
VW unit SEAT will quit the Russian market at the beginning of next year, the daily Kommersant reported Monday, driven out by a crash in the ruble and the dim economic outlook.
"SEAT will stop sales in Russia from January 1, 2015", the newspaper reported citing anonymous sources in the Spanish carmaker, which is owned Germany's Volkswagon.
"This is due to the overall economic situation and the change in the exchange rate" for the Russian ruble, which has lost a quarter of its value against the euro since the start of the year.
The Russian economy has been hit hard by Western sanctions over Moscow's support for separatists in eastern Ukraine, with growth to slow to 0.
3 percent this year and screech to a halt next year according to forecasts by the central bank.
Car sales have been hit hard.
They were down more than 20 percent annually in July through September, but recovered to a 10 percent drop in October thanks to a government sales incentive programme.
SEAT's sales have fallen even more, dropping by 57 percent in January through October compared with the same period in 2013, according to the newspaper.
The company had a 0.
1 percent share of the Russian market.
Vladimir Popov, who runs Favorite Motors, which is a dealer for SEAT as well as Ford, Kia and Volvo among others, told Kommersant that SEAT was penalised by its reluctance to assemble vehicles in Russia, which lowers import duties and thus sales prices of vehicles.
He said the plunge in the value of the ruble made importing of SEAT vehicles unprofitable in the very competitive market.
Many of SEAT's competitors have invested heavily into manufacturing in Russia, which became Europe's second-largest car market in 2012 and is expected to surpass leader Germany in the medium term.
However, European carmakers have scaled back output in Russia in recent months given the dire short-term sales outlook.
© 2014 AFP