Car prices in 2020: forecast

Russians planning a car purchase are interested in price forecasts for 2020. Based on the trends in price changes, many make an important decision - to postpone the transaction until next year or to purchase a vehicle in the near future. Based on past experience, analysts have already figured out what the auto industry expects in the next two years.

Factors affecting the cost of a car

The automotive market in Russia is very sensitive to general economic factors. Significant fluctuations are affected both by the ratio of supply and demand, and the pricing policy of leading manufacturers and dealers of the automotive industry. At the same time, the market for new cars, rather than second-hand ones, depends to the greatest extent on changes in the general economic situation. Among the factors that affect the pricing process of particular importance are:

• The financial and credit system of the state. We are talking about the financial policy of the current government and the impact of the global economy. For example, the size of the key rate on which the availability of loans for the population or the interest of banks in issuing car loans depends.
• Competitive environment. The more offers on the market, the lower the prices. Sellers are fighting for customers through discounts, installments or other attractive offers.
• State regulation. Various kinds of targeted programs, quotas, subsidies, subsidies, tax breaks, government orders and other ways of direct and indirect participation of the state are of great importance for the automotive industry.
• Opportunities for consumers. The purchasing power of the population, as well as the preferences of citizens affect the market and prices.

In addition, the pricing of vehicles depends on fluctuations in exchange rates and on the general trend of rising prices for goods and services.

Preconditions for price increases

According to leading manufacturers, the main factor in raising prices for motor vehicles in 2020 is an increase in the VAT rate by 2%. It is unlikely that any of the market participants will agree to pay this amount from their own profit, experts say. According to analysts, as a result of changes in VAT, cars will go up by 6-7%. Moreover, the peak of growth will be precisely in 2020. This is due to the fact that by the beginning of 2020 commodity residues of 2018 will be sold out and stocks of components purchased at old prices will run out.

Analysts explain the increase of more than 2% by the fact that the manufacture of such complex products as automobiles is associated with the purchase of a large number of components and raw materials. Increased VAT is paid repeatedly at each stage of production. In addition, as practice shows, manufacturers to increase margins will certainly take advantage of the opportunity to increase the cost by more than 2%. As a result, the final price tag for the buyer increases significantly. Experts are sure that the cost of vehicles, due to changes in the VAT rate, will change regardless of the country of origin.

No less important in the pricing mechanism are still fluctuations in the ruble exchange rate. As practice shows, the weakening of the national currency immediately leads to higher prices at car dealerships. That is exactly what happened in 2015. However, the leaders of most auto companies are inclined to believe that if the ruble exchange rate does not go beyond 75 rubles per euro, then the increase will not exceed 5-7%.

The fact that rising car prices is inevitable, says the head of Volkswagen Group Rus, Markus Ozegovic.According to him, cars in the Russian market are still cheaper compared to the main European markets, so there is still potential for further growth. The head also explained that the slow but steady growth of the dollar significantly increases the cost of production.

For information. For the first quarter of 2019, the cost of cars increased by an average of 5%. Least of all added to the price tag of Haval, Chevrolet and domestic UAZ - only 1.6 - 1.9%.

Price Constraints

The main reason why all the major manufacturers of vehicles of the last forces are holding back prices is a decrease in demand. The economic situation in the country is such that inflation outstrips wage growth. Therefore, the purchase of a personal car for many families is an impermissible luxury. The competition between brands for solvent citizens is very fierce. Although statistics show sales growth, most of them are buying a budget segment. That is why in the struggle for customers, manufacturers will keep the rise in the economy class in the range of 1-2%, as most analysts believe.

Car dealers acknowledge that there will definitely not be a sharp increase in prices in 2020. Since this can collapse the already not very active demand. The increase, if any, will be small at 1-2% and gradual. According to analysts, a change in the price tag even by 10% can significantly reduce demand. Brands are more likely to choose a wait-and-see tactic, they will observe the competitors and their prices.

A slight hope that car prices will remain unchanged is provided by a stable key rate and government support measures. The launched state programs “First Car” and “Family Car” have been extended until 2020. 3 billion rubles will be allocated from the country's budget for preferential car loans. Buyers will receive a 10% discount on the cost of the car on payment of the down payment.

For information. Under the state support programs for 2018, more than 130 thousand vehicles were purchased.

Forecasts of experts and manufacturers

According to the forecasts of the methodologists of the independent agency RatingsLab.ru, prices in the automotive market will increase by 4% in January 2020. The second wave of increases is expected to take place ahead of the summer season. As a result, about 4% will be added to the average cost. In the future, the growth trend in value will continue, in increments of one percent per month. But by the end of the year, when demand decreases markedly, as a result of discounts and promotions, cars will lose 3-4% in price.

The fact that price increases in 2020 cannot be avoided, says the head of the Skoda brand. According to Jan Prokhazka, all the resources that help to curb the jump in prices have long been exhausted. A similar opinion is expressed by the Director General of the consulting company Walter Construction Evgeny Walter. Given a stable ruble exchange rate, vehicles will rise in price by no less than 10%, the head says.

Read also:

• Extension of capital amnesty for 2020
• Gazprom shares: forecast for 2020
• What cryptocurrency will grow in 2020

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