In September, Geely achieved its best ranking since entering the Russian market.

Like China, Russia's automotive market enters its year-end sales peak season every September, with a noticeable increase in sales volume.

Therefore, in September, the Russian light vehicle market achieved its highest single-month sales since the pandemic (excluding Mercedes-Benz, BMW, MINI, and Smart)—154,409 units.

This sales volume is second only to March's 162,321 units this year. September marked Russia's fourth year-on-year sales growth, with a 3.4% increase, and the second positive growth since July.

This suggests a clear recovery in the Russian market in the second half of the year.

The road ahead remains challenging

Indeed, following the pandemic, people's willingness and demand for car purchases increased to cope with travel restrictions and safety concerns. Simultaneously, to revive the economy, the Russian government introduced numerous stimulus policies. The automotive industry alone received an additional 25 billion rubles (approximately 2.17 billion RMB) in funding for subsidies on loans for family car purchases and car rentals.

Furthermore, the continuous decline in the ruble exchange rate this year has also encouraged people to buy cars more actively.

Affected by the pandemic and falling oil prices, the ruble's exchange rate has been falling sharply since the beginning of the year. Vladimir Bespalov, an analyst at VTB Capital, stated that the ruble depreciated by 16% against the euro from July 1 to October 1, with a 5% drop in September alone. As is well known, the production of certain automotive components requires imports from various countries or regions. The devaluation of the ruble will inevitably increase manufacturing costs, leading to higher prices. Therefore, many consumers choose to buy cars early.

Under the influence of these factors, the Russian market's sales in the third quarter increased by 3.2% year-on-year, adding 13,416 units to the annual total. However, due to losses of 190,000 units earlier in the year because of the pandemic, the total sales of light vehicles in Russia for the first nine months reached only 1,094,805 units, still down 13.9% year-on-year.

Moreover, the good fortune of the third quarter is unlikely to continue into the fourth quarter. The European Manufacturers Association (AEB) recently predicted that sales for the entire year 2020 will fall by 13.5% year-on-year to 1.522 million units. While this figure is significantly better than its July estimate of 1.3 million units, it only represents an increase of 437,000 units (an average of 146,000 units per month) over the first three quarters, which remains rather pessimistic.

This pessimism is not unfounded.

One reason is the significant spread of the pandemic in Russia at the end of September, particularly the daily increase of over 10,000 cases since early October, which continues to grow. If a large-scale outbreak occurs, various regions will have to strengthen prevention and control measures again, which will once again cause considerable losses to the automotive industry and the economy. Another reason is that oil prices have not rebounded, and while the rate of ruble devaluation has slowed, it is still falling. Overall, the obstacles to Russia's economic recovery remain significant.

Therefore, even if this year's performance ultimately surpasses AEB's expectations, these difficulties will continue to affect the automotive market in 2021.

The Chinese 'Legion' is coming on strong

Looking at the sales of major brands in September, with the overall market turning positive, many brands such as Subaru, Renault, and UAZ have experienced rare growth. Among these growing brands, five saw increases exceeding 100%, and four of them are from the Chinese independent sector: Changan (230.4%), Geely (171.2%), Chery (147.5%), and Foton (127.3%).

Since the beginning of this year, Changan has been the fastest-growing brand in the Russian market and the only brand to have grown for nine consecutive months, maintaining a 52.7% growth even when the car market fell by 72.4% in April.

Although Changan's surge is largely due to a low base in the same period last year, it must be acknowledged that the situation in the second half of the year is different.

With the successive commissioning of the CS35 Plus and CS75 Plus at the Unison factory in Belarus in mid-June and the start of supply to the Russian market, Changan's sales have made a qualitative leap, especially in September, when sales exceeded 1,000 units, reaching 1,021 units. This is the first time Changan has exceeded 1,000 units in a single month since entering the Russian market, and it is also its highest monthly sales volume.

However, the most eye-catching Chinese independent brand in September was not Changan, but Geely, whose growth rate was only slightly lower.

In September, Geely's sales also reached a record high since entering Russia, at 2,178 units. This sales volume not only gave Geely a 171.2% increase but also helped it regain the top spot among independent brands after four months. It also achieved its highest ranking in the Russian market—12th place, which is also the best ranking for a Chinese brand in Russia.

Since AEB only provides monthly sales data for the top 50 models, and Geely's Russian website does not publish specific monthly sales figures, the performance of its various models in September remains unknown. The only thing known is that Geely's sales are expected to reach new highs in the future. Geely's Russian website shows that the brand currently sells the Atlas (Boyue), Coolray (Binyue), Emgrand X7, and Emgrand GS, and a new model is about to be launched.

In addition to Geely's surprise, Chery also made a significant impact. Because following Geely in September was not Haval, but Chery. After exceeding 1,000 units for the first time in August, Chery's sales reached a new high of 1,490 units in September, surpassing Haval to become the runner-up among Chinese brands that month. According to information from Chery's Russian website, the increase in Chery's sales in September was largely due to the launch of the new TIGGO 7 PRO (Tiggo 7 Pro) on September 10.

Unlike the previous three brands, which all set new records, Haval seemed to be underperforming in September, with sales falling to 1,422 units. However, this change was not caused by external factors but rather Haval's own choice. To meet the growing needs of Russian consumers, Haval decided to increase production at its Tula plant, increasing its workforce in mid-August and starting upgrades to the Haval H5 and H9 production lines in September, thus affecting September's sales. It is believed that after the completion of the upgrade and renovation work, Haval's sales will rebound.

Thanks to the efforts of brands such as Changan, Geely, Chery, Haval, and FAW, sales of Chinese independent brands in Russia surged by 90.9% in September to 6,781 units, and sales in the first three quarters increased by 39.9% year-on-year to 36,507 units, making it the only segment in the Russian market in the first three quarters of the year to maintain double-digit growth.