Forecast for car prices in 2020
If you are planning to buy a personal vehicle or just want to keep abreast of the country's car market trends, then you will be interested to know the forecast of car prices in 2020. All details about pricing policy and the cost of cars are in the article.
Factors That Affect Car Prices
To understand what to expect from a pricing policy that extends to the Russian car market, a number of factors that directly affect car prices should be considered. These include:
- The economic situation in the country. If it worsens, respectively, the solvency of the population decreases, as a result of which the demand for cars falls. And car dealers lower prices to attract middle-class buyers and make cars more affordable for ordinary citizens. In Russia in the 2020th year, a significant deterioration in the state of the economy is not expected.
- Features of the financial and credit system of the Russian Federation. This includes the size of the key rate, the standard credit conditions available to the general public, and the interest of banks in issuing loans. The more affordable car loans, the higher the purchasing power of people, the greater the demand. And high demand allows car dealers not to reduce prices for popular cars.
- State regulation. These are subsidies provided to the Russian population, existing targeted programs, subsidies, tax breaks, quotas and the like. Such ways state. regulation can both indirectly and directly affect the auto industry.
- Competitive environment. The more offers there are on the market, the lower car prices. Sellers are forced to fight for potential buyers, and the main ways to attract customers are favorable installment or loan terms, discounts, seasonal or year-round promotions. The Russian market is now pleased with a wide range, and thanks to a significant number of offers to customers, there is plenty to choose from, and options for different price categories are available.
- Opportunities and needs of consumers. The purchasing power of the Russian population over the past few years has increased significantly, and its decline is not predicted by experts.
- Pricing policies determined by global and domestic car dealers. The prices for cars are set, first of all, by their manufacturers, taking into account all the above factors, as well as the characteristics of specific cars and their models: equipment, design, features and so on.
Increase in car prices in 2020
Will there be an increase in car prices? According to Russian experts, price increases are possible, and it will be determined by an increase in the rate of value added tax (VAT) by 2%. Although the increase is not so significant, car dealers who are participants in the car market of the Russian Federation are unlikely to want and consider it necessary to pay the tax due to their own profit. Payment of VAT, as usual, will fall on the shoulders of buyers. Moreover, it is projected to increase prices by more than 2%. This is due to the fact that the automotive industry is considered a complex and multi-stage process: the same VAT is paid at each step of production, which increases the cost of cars.
A peak in price increases is expected just in 2020, and there is an explanation for this: car manufacturers by this time will sell off the remnants of the goods of 2018 that were produced using components and parts purchased from old price lists. In addition, car dealers always strive to increase margins - the real difference between cost and final price. And the final price tags for buyers can increase by 6-7%. Experts say that due to an increase in VAT, prices for Chinese cars, domestic, German and others will increase, regardless of the country of production.
Another component of the pricing mechanism is the fluctuation of the Russian currency - the ruble. And practice shows that if the currency is unstable and even more so weakened, this inevitably entails an increase in the price of cars in specialized salons. A similar situation occurred several years ago - in the 2015th year. But the leaders of many automobile companies agree that if the value of the euro does not exceed 75 rubles, then prices will not increase by more than 5-7%.
The inevitable rise in prices in Russia and other countries was reported by Markus Ozegovich, who is the head of Volkswagen Group Rus. He argues that the pricing policy of the Russian market is softer and more loyal to customers than in other European countries: in our country, car prices are slightly lower. So growth opportunities exist, and it is predicted. In addition, the head of a large company said that the increase in value is also due to the steady increase in the dollar, which affects production costs.
For reference! In the first quarter of the coming 2019 year, an increase in prices by 5% was already observed. But not all car dealers so significantly increased the price tags: the Russian UAZ, Chevrolet and Haval boast a slight increase on average by 1.6-1.9%.
What will keep prices down?
The main reason for containing car prices by many manufacturers is a decrease in demand for products. Inflation in Russia is still ahead of the increase in average salaries, which is why for many citizens the purchase of a personal car remains an unacceptable luxury. And although, according to statistics, there is an increase in sales, but in many respects it is due to the involvement of the budget segment. And therefore, many analysts believe that in order to fight for customers, most manufacturers will keep the rise in price of economy-class cars within 1-2%.
Car dealers themselves confirm that they definitely do not plan for a sharp price increase for 2020, because in this case the already not very active demand may fall even more. The increase will be gradual. And all major brands will prefer wait-and-see tactics in the first quarter of 2020, observing their competitors and analyzing the purchasing power of Russians. If prices rise simultaneously by 8-10%, then demand will fall sharply, which is unprofitable for car dealers.
The hope of maintaining the same car prices remains due to the fact that the key rate is stable and favorable government support measures are in place. Active programs “Family Car” and “First Car” will not be canceled: they are extended until 2020. In addition, three billion rubles are allocated from the state budget for preferential profitable car loans. And for paying the down payment, buyers will receive a discount of 10% of the cost of the car.
What forecasts do manufacturers and experts make?
Prices for cars in 2020, according to employees of the independent agency RatingLab.ru, will increase by about 4% from January 2020. And the second wave of increase is expected to come before the summer season. And this will add about 4% to average prices. Further, growth trends will continue, and the step will be approximately 1% per month. But by the end of the year, as usual, demand is falling, and prices are falling due to stocks and discounts by 3-4%.
A price increase is inevitable, according to the head of the Skoda car company Jan Prokhazka. He claims that resources to keep price spikes have been exhausted. A similar point of view is expressed by Eugene Walter - the head of the consulting company Walter Construction. He states that if the ruble exchange rate is stable, then the rise in price of vehicles will be at least 10%.
These were forecasts of car prices for 2020. A rise in price is expected, but insignificant.