Russia expected to be third largest global market by 2012

Jonathon Ramsey — Wed, 21 Jan 2009 11:27:00 EST

Filed under: Etc., Europe, Earnings/Financials, Russia

Russia has long been included under the "emerging markets" umbrella that carmakers have been saying would lead to future industry growth. The economic fallout put an end to those predictions, with Russia suffering just as badly - and if you include the oil sector, some would say even worse - as any other economy. But even though sales are down, Frost & Sullivan predicts that Russia could rebound to be the world's 3rd largest auto market by 2012, behind the U.S. and China.

The prediction is based on steps Russia is taking to strengthen its automotive sector: it is increasing import tariffs and limiting the importation of used cars. The new importation law, similar to one recently passed by Bolivia, reduces the maximum allowable age of an imported car from 7 years to 5. Russia is also reviewing bank lending practices, since the money it flushed into the economy hasn't really had an effect on loan availability yet (not unlike the U.S.).

Lending and the size of the import tariff that Russia imposes seem to be the most important factors in making this prediction come true. But one thing not mentioned in Frost & Sullivan's forecast was oil. When the world economy gets off its knees, the price of oil is going to head for the moon again, and "expensive" oil means more Russians with money, and that could mean a return to more sales, provided the country's oil barons share the wealth. You can read the full press release after the jump.

[Source: Frost & Sullivan]

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Toyota sees more struggles in 2009, blue skies next decade

Chris Shunk — Wed, 17 Sep 2008 19:28:00 EST

Filed under: Car Buying, Lexus, Toyota

The US auto industry has hit a serious slump in 2008, with overall sales estimated drop by two million vehicles compared to 2007. Even the mighty Toyota has seen sales slip by 7.8%, which is better than the industry average, but a far cry from annual increases of 10%. And times may not improve in 2009 either, as the credit crunch and mortgage crisis have conspired to kick the auto industry in the pants. Toyota sales boss Jim Lentz says the mortgage crisis is the main culprit of tough sledding for the Japanese automaker. Florida and California, which account for 30% of overall Toyota Sales, have been especially hard hit by decreased home values. Lexus sales have been hit hard, too, as one third of all of purchasers in the Sunshine State use home equity to buy their luxury vehicles. It doesn't take an accounting degree to know that houses are typically assets and cars are almost always liabilities. That large amounts of people who were using home equity to purchase cars is disturbing, and it's likely a trend that isn't unique to Toyota.

Toyota does see light at the end of the tunnel, as the Japanese automaker expects the US population to grow by 32 million in the next decade. Toyota also expects the rate of affluent customers to rise, which means more people with more money will want to buy a new car or truck. For the near term, since housing has gone nowhere but down and lenders are having trouble coming up with money, we're guessing the car market will be taking a hit for quite a while.

[Source: Detroit News]

Toyota sees more struggles in 2009, blue skies next decade originally appeared on Autoblog on Wed, 17 Sep 2008 19:28:00 EST. Please see our terms for use of feeds.

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