Russia was expected to be Europe's largest market in 2009

Year-on-year new car sales in Russia in July fell 58 per cent on 2008 levels, despite the government’s attempts to prop up the ailing car industry.

Data from the Moscow-based Association of European Businesses (AEB) showed Russian sales fell by 58 percent to 115,483 units last month and this followed a 56 per cent drop in June. Sales for the year to date were down 50 per cent on 2008 levels to 879,144 units.

Unlike most western European nations, Russia has not introduced a scrappage incentive scheme. It has assisted the industry by offering a subsidy to banks to lower the cost or new car loans.

David Thomas, chairman of the AEB's automobile manufacturers committee, said: “We hope the actions taken by the government will start to reverse this trend during the summer, but urge close monitoring of the situation to ensure the actions are taking effect.”

Car manufacturers have expanded rapidly into Russia in recent years and it had expected to be Europe’s largest market for new car sales in 2009. Sales have suffered in the global recession as customers have found it difficult to obtain credit in Russia.

Market leader Lada's sales were down 42 per cent last month to 32,426 units. Chevrolet, Russia's second biggest selling brand, saw its volume drop by 59 per cent to 7798 units while third-ranked Ford was down 72 per cent to 5333 units sold.

Sales at GM's Opel unit, which potential new owner, Magna wants to expand in Russia, fell 62 per cent to 3243 units. Opel ranks 11th in Russia with sales of 25,066 units so far in 2009.

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