SUVs Rapidly Becoming Vehicle of Choice in Russia

ST. PETERSBURG, Russia – The Russian SUV market is steadily growing, accompanied by the launches of global auto makers’ new models.

Sales of SUVs in Russia last year totaled 843,100, accounting for 30.6% of the market and coming within closing distance of the top-selling C-Class segment with 852,500 deliveries, according to data from Russia’s AUTOSTAT market-research agency.

SUV sales in 2012 included both premium brands and low-cost models such as the Lada 4x4, Chevrolet Niva, Nissan Qashqai and Toyota RAV4.

According to Russian analysts, the SUV market has become the country’s largest, with annual sales expected to jump at least 30%-35%  in coming years and even higher in the premium segment.

"In contrast to the (European Union), Russia is among a few countries where a stable demand for large SUVs is observed,” says Denis Petrunin, managing director of Hyundai’s Commonwealth of Independent States subsidiary.

“One of the most important factors for a Russian customer is his status, which is created by his car,” he says, adding the country’s tax system and low cost of gasoline reltative to the EU and U.S. make SUV ownership relatively inexpensive.

Dmitry Kolchanov, regional director-foreign markets for Jaguar Land Rover, says SUVs will continue to occupy a significant part of the Russian market mainly due to the vehicles’ performance in the harsh climate and on bad roads.

Global auto makers are responding to the growing demand for SUVs in Russia by launching production of new models at their local plants or increasing imports.

General Motors several weeks ago announced plans to begin manufacturing Chevrolet Trailblazer SUVs this spring at its facility in St. Petersburg. Annual production capacity is estimated at 10,000 units, while sales this year are projected at 4,000.

Sollers-Bussan, a joint venture between Russian auto maker Sollers and Japanese industrial corporation Mitsui, launched production of Toyota Land Cruiser Prado models in January. The JV plans to build 1,000 Toyota vehicles a month at Sollers’ Vladivostok plant, according to Russia’s RIA Novosti news agency.

In addition to the increase in local production, SUV imports into Russia likely will grow as a result of the country’s recent admittance to the World Trade Organization.

As a WTO member, Russia will cut customs duties on vehicles with engine capacity up to 4.2L from 25% to 12% by 2019, while duties on vehicles with 4.2L or more will be reduced up to 10%.