“Hit by a plunge in the Russian rouble and increased buying incentives in the United States,” (an interesting combination of events, presented by Reuters) Hyundai’s net profit took a 19 percent plunge for the October to December quarter. Will other carmakers meet a similar fate? Check out their exposure to the double toxic Russian market.
Russia, not too long ago feted as the “R” in the BRICs (which, except for the C, haven’t fared too well anyway) was hit by a multiple whammy: Sanctions took a big bite out of an economy hit very hard by plummeting oil prices. Automakers active in Russia are faced with a car market that contracted 11 percent in 2014. Much worse, what little profits they made in Russia are devalued along with the Russian rouble. In 2014, the Russian currency lost 43.5 percent of its value as capital fled the troubled country.
|Brand / Group||Auto sales Russia, January-December|
|Source: ASSOCIATION OF EUROPEAN BUSINESSES (AEB)|
The Hyundai-Kia group was the second-largest in Russian unit sales in 2014. Seeing its Russian sales erode by only 1 percent in 2014, the group can consider itself lucky. But look what an impact it made.
Hyundai-Kia is dwarfed by the Avtovaz-Renault-Nissan group, born from a recent amalgamation of market leader Avtovaz (Lada) with the Renault-Nissan Alliance. On a group level, sales sunk 7 percent.
Number three on the list of companies exposed to the Russian contamination is the Volkswagen Group. Its sales were down 12.4 percent in 2014.
Next in line is General Motors, and it is so out of luck that one is starting to feel sorry. Chevrolet took a nearly 30 percent dive in 2014. The Russians are taking their car cues from Europe, and seeing Chevrolet pull out of the EU, the Russians likewise fled Chevrolet, or so it seems. The other GM brands did not fare much better, bringing GM’s Russian sales down nearly 29 percent in 2014.
Russia was seen as the savior of Opel, at least on paper: From 201 through 2013, Russia was a part of China, at least in the world of GM. As of January 2014, Russian operations were put “back under the control of its European wing,” as Reuters reported. “This will allow GM Europe to emerge more quickly from the red,” Germany’s motor-mouth Ferdinand Dudenhoeffer said. Ooops. During the 2008/2009 crisis, GM’s Europe business nearly was bought-out by the Russians, and many at GM wish they would have said yes to the deal.
5th-largest Toyota actually saw, wonders of wonders, its Russian sales increase by 6.3 percent in 2014, mainly due to increased Lexus sales, as Russians hurried to convert their anemic roubles into less depreciating auto assets.
Ford is usually quick to blame foreign carmakers that a sinking currency will give them an unfair advantage. You won’t hear the complaints this time. Ford lost nearly 40% of its Russian sales in 2014, and converted into dollars … let’s not even go there.
A year ago, we predicted that “Renault, Hyundai, GM, and Volkswagen will lose the war in the Ukraine,” and sadly, we were right. When carmakers report their 2014 results in the coming weeks, prepare to hear “Russia” mentioned a few times.
For more on the matter, please peruse the table brought to you by the Association of European Businesses in Russia (AEB). I have edited the table slightly to correct a few oversights, such as uniting Kia with Hyundai, and bringing Porsche and Daewoo under the folds of their respective groups. If you want the original, here it is.