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Russian car sales slump 8% amid wider slowdown

Russia’s car sales dropped by eight percent in July amid a sharp economic slowdown that threatens to slip into a recession by year-end, data showed Thursday.

The widely-watched AEB Automobile Manufacturers Committee study also showed January to July car and light commercial vehicle sales to have declined by six percent compared to the same period in 2012.

“Total market momentum was not good in recent months, and July has not brought about a fundamental change to that,” AEB Automobile Manufacturers Committee chairman Joerg Schreiber said in a statement.

“There are indications however that the rate of decline has reached its peak in the second quarter, and that we can expect a gradual improvement to the point of stabilisation in the coming months,” he added.

Russia has scaled down its 2013 growth forecast to 2.4 percent from 3.6 percent after initially admitting that it would fail to reach the five-percent expansion target set by President Vladimir Putin.

The economics ministry had warned earlier this year that growth — hampered by reduced consumer demand and a sharp reduction in investment — could evaporate completely by the end of the year unless urgent structural changes are made.

Russia is now studying various government investment alternatives that could help improve consumer demand and re-energise the stalled manufacturing sector.

Schreiber noted that the government’s recently-announced plan to support retail-financed automobile purchases “will be helpful in reaching (stabilisation) sooner rather than later.”

AEB Automobile Manufacturers Committee survey showed Russian car sales once again dominated by the domestic auto manufacturer Lada — maker of low-end cars popular across the country since Soviet times.

But the study showed Lada’s sales also suffering a 20-percent drop in July to 37,549 units from 47,093 vehicles the previous year.

The French manufacturer Renault trailed Lada in second place with 122,646 vehicles sold in the first seven months of the year compared to the Russian maker’s 264,278 units.