Russian Revolution: The World's Hottest Car Market
Detroit News--Fueled by a surge in oil prices, Russia has turned into the hottest of the hot emerging markets -- countries where automakers that can supply the right models earn a lot of money, particularly in the early stages of the boom when demand is outstripping supply.
In the past five years, auto sales have tripled. By 2010, many forecasters see Russia overtaking Germany to become Europe's No. 1 auto market with sales of more than 4 million vehicles.
"There's no sign that this is going to slow down," said Carlos Ghosn, CEO of Renault SA and Nissan. The demand for oil and other raw materials that Russia holds in vast reserves is not likely to subside, he said.
As crude prices have climbed to record levels, Russia's economy has taken off. Its gross domestic product has quadrupled since 2000. The country that once enforced economic equality now counts the second-largest number of billionaires. On the wide boulevards of Moscow and St. Petersburg, glittering Yves Saint Laurent and Gucci boutiques have replaced the drab Soviet stores with their bare shelves.
While China and other emerging economies are evolving fast, the speed of the Russian transformation caught people by surprise. "The unique thing with Russia is that with the boom in commodities, the economy has strengthened very quickly. That's something we didn't foresee when we first started investing in Russia," said Lewis Booth, Ford of Europe chairman.
For automakers like Ford, GM, Toyota and Nissan, which are struggling to boost sales in saturated home markets, emerging economies represent great opportunities at a challenging time.