Russia's car market to be Europe's biggest by 2020 -report

Thu Jul 18, 2013 4:01pm EDT
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* Russia to rank world's fifth by 2020-report

* Sees average annual growth rate of 6 percent

* Emerging markets will account for 65 pct of auto sales by 2020

MOSCOW, July 19 (Reuters) - Russia's auto market is on track to overtake Germany and become the largest in Europe - and the fifth biggest globally - by 2020 as car ownership increases, supporting a large local industry, a Boston Consulting Group report said.

Western carmakers including General Motors, Ford , Renault and Fiat have invested heavily in Russia, betting that the market will grow as a rising middle class becomes first time car owners or upgrades aging models.

There are only 290 cars per 1,000 Russians versus 560 in Western Europe and many of those vehicles are old, while a decade of strong growth driven by Russia's mineral wealth is slowly empowering a greater chunk of its population.

"Fundamentally its an attractive market in terms of cars per thousand inhabitants and therefore we are bullish long-term - but that doesn't mean that every year will be a good year," said Ewald Kreid, one of the authors of the report and a partner at BCG in Vienna.

The report predicts that Russia can follow Brazil and China in transforming itself from a market targeted by foreign exporters, to one with a dominant share of locally-produced vehicles.

BCG forecasts that Russia's auto market will grow by an average annual rate of six percent through 2020, when it will reach annual sales volume of 4.4 million.   Continued...