The ruble has been devalued by more than 40 percent since last June in what is Russia’s greatest financial crisis since 1998. In the past weeks, Russians have been buying cars, especially expensive ones like Porsches, in order to convert their money into something tangible.
At the same time, the ruble collapse has been detrimental to automakers’ profits, to the point that some of them have temporarily suspended sales until they decide how to cope with the crisis.
General Motors’ Russian unit announced to its dealers on December 16 that it halts sales to “manage its business risk”. Vehicles that have been already purchased will be delivered from Chevrolet, Opel and Cadillac at the agreed-on price, but GM hasn’t set a date on which it will resume its operations.
On the same day, Audi also halted sales in Russia and will also halt production at its local Kaluga plant from December 22 to January 12 for a holiday break. Company spokesman Aleksey Kozhukhov commented that sales will start again after Audi sets a new price list. VW is still selling cars but is watching the situation “with concern”.
Jaguar Land Rover also announced that it has halted sales until December 19 due to the economic situation in the country. Toyota has no plans to halt sales but it will increase its pricing to adjust to the economic conditions.
The ruble’s unexpected, and quite significant, drop “is causing major pain”, Evercore ISE Arndt Ellinghorst told Bloomberg. If the ruble loses half its value, BMW may lose €100-150 million in earnings in the fourth quarter. As a means of damage control it is relocating its production to other markets, said company spokesman Nikolai Giles.
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