Expectations of price increases due to the depreciation of the ruble, and the shortage of new cars had a positive impact on the Russian used car market. Sales in September, according to the estimates of the analytical agency “Autostat,” increased by 22.4% in comparison with last year’s figures. The pace of sales in the secondary market is also supported by deferred demand: due to the coronavirus, buyers could not satisfy their buying cars’ requests.
In September, the demand for used cars increased by 22.4%: Avtostat calculated that in the first month of autumn, Russian consumers purchased 565,000 used cars. Lada (128 thousand), Toyota (63 thousand), Nissan, Hyundai, and Kia (32 thousand each) were especially popular among buyers. September figures reflect the market trend recorded in the middle of summer – demand for used cars in July increased by 11% by 14% in August.
Distributors also note the increase in the number of customers wishing to purchase a used car. After the cancellation of quarantine, Avto.ru recorded a record demand in July:
- 58% more often accessed advertisements for the sale of new cars,
- by 17% – used cars (compared to last year’s figures).
According to Avito Auto, in the third quarter, sales of used cars grew by 40% compared to the second and 18% compared to the third quarter of 2019.
The growth in sales in the secondary market is due to the deferred demand and shortage of new cars, said Anton Deakin, Sales Director of Avilon. Quarantine led to a redistribution of volumes from spring to summer and affected September, which formed the impression of increased piece rates. If not for the coronavirus crisis, the sales dynamics would have remained flat.
Mr. Demkin emphasizes that the market expects stabilization of demand in the near future.
New cars will appear in the dealers’ warehouses, which will take over some of the customers. This will allow buyers to trade-in their cars, which will increase the stock of used cars on the market. The executive director of SberAvto Roman Abramov reports that many good, liquid cars have already been bought, or they have risen sharply. Therefore, there are now quite a few cars with low liquidity in the market.
The sharp increase in demand was also due to the change in the exchange rate – in September, the ruble showed a sharp decline. Avto.ru emphasizes that Russians try to preserve their savings during crises, buying expensive goods, often at the expense of credit funds. A survey confirms that the company recently conducted among dealers: almost half of them noted that buyers began to borrow cars more often at the expense of loans. A jump in the exchange rate is always reflected in consumer behavior, points out Mr. Abramov.
Following the demand, prices on the secondary market gradually began to grow.
Avito Auto experts point out that the average price of a used car in Russia in the third quarter of 2020 amounted to 300 thousand rubles – 13% more than in the previous quarter and 11% higher than a year ago. The leaders are:
- Moscow and the Moscow region (the average price was 495 thousand rubles),
- St. Petersburg and the Leningrad region (395 thousand rubles),
- Tatarstan (320 thousand rubles).
The smallest average cost in the top 20 used cars, according to Automama’s calculations, was 756 thousand rubles, or 46 thousand rubles. More than in May.
On average, a car’s cost in the secondary market for the third quarter increased by 10-15%. In addition to demand, its growth was also stimulated by the cost of new cars, which is taken into account in its formation.
Mr. Demkin notes that with a rise in prices for new cars, the residual value of a used car may increase.
VTB Capital analyst Vladimir Bespalov believes that today it is difficult to predict the market’s future situation-unknown not known what consequences the pandemic will bring. However, prices will gradually stabilize as buyers’ demand will be satisfied. ROAD Vice-President Oleg Moseev believes that prices are unlikely to begin to decline. The average cost of used cars is likely to be fixed at a new level.