Chinese automakers in Russia are beginning to phase out discount programs, driven by increased demand for new vehicles, a reduction in the Central Bank's key interest rate, and declining dealer inventories. Dealers reported to "Gazeta.ru" that in early August, Changan notably revised its pricing policy, cutting bonuses on popular models like Alsvin, CS35 Plus, CS75 Plus, Hunter Plus, Lamore, Uni-K, Uni-S, Uni-T, and Uni-V. Geely has limited discounts on the Coolray crossover, while Soueast has scaled back incentives on the S09 model. The Kaliningrad-based "Avtotor" plant has also increased the price of its electric vehicle "Amberavto" A5.

According to Renat Tyukteev, Deputy General Director of the "Avilon" group, the share of last year's cars in stock has fallen below 30%, and average dealer inventory has decreased to about 1.5 months of sales. This reduces the need for manufacturers to incentivize purchases with discounts. "Rolf" also noted reduced stock levels and no overstocking, indicating that some promotional campaigns will be curtailed in September, though sharp price increases are not anticipated. Andrey Olkhovsky, CEO of "Avtodom" and "AvtoSpetsTsentr," added that prices are likely to remain at August levels in September, with future dynamics depending on the overall economic situation. From January to July 2025, 640.6 thousand new passenger cars were sold in Russia, a 24% decrease compared to the same period last year. However, July showed a 33% month-on-month increase, exceeding 120,000 vehicles sold. Sales declined for several major brands: Exeed (-57.5%), Omoda (-47.5%), Geely (-47%), BAIC (-40%), Jetta (-39.4%), Tank (-38.6%), Changan (-37.9%). Conversely, growth was recorded for Belgee (+35.7%), Solaris (+141.5%), Evolute (+67.2%), Jetour (+11.1%), and GAC (+15.7%).

Market Signals

Sector Impacts and Opportunities: The shift away from discounts signals a strengthening market position for Chinese brands in Russia, potentially leading to improved profitability.
Price Movements and Volatility: Prices are expected to stabilize or increase slightly, reducing discount-driven market volatility.
Competitor Positioning Changes: The enhanced position of Chinese brands could put pressure on other competitors, especially as inventory levels decline.

Winners & Losers

Winners: Chinese automakers that can maintain sales volume while reducing reliance on discounts, and dealers who may benefit from higher profit margins due to lower inventory. Losers: Consumers who will face higher prices and fewer discount opportunities.

Action Timeline

Immediate: Monitor the new pricing strategies of leading Chinese brands.
Short-term: Adjust purchasing plans for consumers in anticipation of more stable pricing.
Long-term: Re-evaluate market entry strategies and alliances for foreign companies.

Risk Assessment

Regulatory Risks: Potential for higher recycling fees on imported vehicles.
Market Volatility: Dependence on the overall economic situation and consumer demand sustainability.
Geopolitical Tensions: Potential impact of sanctions and supply chain disruptions.

Key Indicators

Signal for the Market: The Russian automotive market is undergoing a strategic shift towards a less discount-driven sales environment.
Leading Indicators: Declining dealer inventory levels and rising demand are the primary indicators of this trend.

Regional Perspective

The curtailment of discounts by Chinese brands in Russia indicates market maturity and growing confidence from these manufacturers to attract consumers based on product rather than price, particularly amid falling interest rates and rising demand.

What to Watch

Leading Indicators: Continued decline in dealer inventory levels.
Expected Next Developments: Stabilization or slight increases in prices expected in the coming months.
Key Decision Points: Consumer response to potential price increases and the sustainability of demand.

Analysis

This shift in pricing strategies by Chinese brands in Russia reflects their increasing confidence in the market and their competitive capabilities. With falling interest rates and lower inventories, they can move away from aggressive discounting policies, potentially improving their profit margins. However, consumers should prepare for a different pricing environment, and companies must closely monitor market developments to adapt to this new dynamic.