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Kent Bjertrup, ALD Automotive: Russia - plunging car sales, blossoming fleet opportunities

Russian new car sales fell 39% in October and over 40% in November compared to 2014, and uncertainty is the word for the coming years. How do the stakeholders in the fleet industry cope? ALD Automotive new CCO and former ALD Russia General Director Kent Bjertrup shines his light on the situation.

The Russian vehicle industry is sliding down a slippery slope. What is happening on the market?
Kent Bjertrup: “The sharp devaluation of the rouble in 2014 and the economic crisis translate into a decline in new car sales, that will probably reach 40% by the end of the year. Remarkably enough, premium brands such as Porsche and Lexus are selling more cars than last year, whereas Hyundai and Kia withstand the crisis far better than Lada and the Japanese brands. As GM decided to pull Opel and Chevrolet from the market, its sales have dropped by more than half.”

How does this affect the leasing companies present in Russia?
“Our major clients, mostly pharmaceutical companies, have been expanding their fleet by 10% on average during the past years. We have not seen this increase this year, as many of the planned investments are being cancelled. In short, the operating lease market, which represents less than 10% of the total corporate vehicle market, is currently not growing, but there are still plenty of opportunities in the remaining 90%.”

What are the challenges that fleet managers with responsibility in Russia are faced with?
“Some dealerships in the Regions are closed or closing down, making it hard to get the vehicles serviced in the official network. Getting spare parts is becoming very difficult in some cases. There are independent garages you can go to, but then you lose the factory warranty on the vehicle. Moreover, not every repairer has good intentions, so to speak. In many cases they want to be paid cash, which is against corporate policy and opens the door for compliance breaches.”  

What is the economic outlook for the coming years?
“The Russian economy, which is highly dependent in oil and gas, contracted 3.8% from a year earlier in the first nine months this year. For next year the Central Bank forecasts 0%, whereas 2017 should see the return of economic growth. One thing remains clear: even though the major international players may abolish some products and services to adapt to the new situation, none of them is pulling out. They have invested in Russia, they believe in Russia and they are there to stay.” 

What is your advice for fleet managers managing a fleet in Russia?
“First of all: choose cars of a brand that has a good service coverage in the Regions: Volkswagen, Skoda, Renault, Ford, for instance. Secondly, be aware of the fact that local decision makers have a different mentality, sometimes leading to compliance issues. That is why you should entrust an international, experienced leasing company with your fleet operations in Russia.” 09/12/2015  |  Dieter Quartier

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