Report "Russian Automotive Market: Passenger Cars, Components and Spare Parts 2006 -2010":

Russia is, with a population of over 140 mio., a large attractive market, measured by the number of potential consumers. With a nominal GDP per capita of 6.854 USD in 2006, growing at almost 7% annually, consumers are able to make investments on a constantly increasing scale. The automotive market is one of the most eye-catching sectors to reflect these positive trends.

The consumer potential together with increasing income makes Russia today one of the most attractive markets for the world automotive industry. Already by 2009, Russia is going to overtake Germany in terms of new cars sold, and most of the vehicles will be of foreign origin. 2006 became the first year in which Russians bought more foreign cars than those of domestic brands. New car sales reached 1,8 mio. in 2006 – a huge increase from less than 1 mio. in 2002 – and will continue to grow at a rate of 21% until 2010. This rapid development is, apart from growing income, driven by a comparatively old Russian car parc, better access to car loans, increasing local production of foreign cars and expanding dealership networks.

Alongside with the car parc, the market for components and spare parts is growing fast as well, at a rate of 14% until 2010. The major growth will be in the sector of components and spare parts for foreign car brands, whereas the market for Russian brands will almost stagnate over the next years. In 2008 and 2009 the primary (components) and secondary (spare parts) markets for foreign brands will overtake the same markets for Russian brands, respectively.

To prepare this market report, we used primary and secondary research methods: expert interviews and consumer surveys – in particular for the market of automotive parts, which is not covered yet by any substantial statistical data – and standard analysis of secondary information available on the topic. Based on our experience and developed competencies we have built proprietary market models to forecast future market development. The report was compiled in the period from March to June 2007 and hence includes statistical data from Q1 2007, if available.

For an complete table of content and list of figures and tables, please see the details below.

The report contains about 90 pages and is priced at 890 Euro. To order, please use the attached order form or contact us at marktforschung(at)globis-berlin.de or +49 (0)30 4005 49 0.

Globis is a Germany-based consulting company with broad international coverage regarding strategy development, especially entry strategies into new markets.

TABLE OF CONTENTS 2

TABLE OF FIGURES 4

1 SUMMARY 6

2 COUNTRY BASICS 9

2.1 Economic Development 10

2.2 Comparison with European Union 12

2.3 Regional Economic Development 13

3 RUSSIAN PASSENGER CAR MARKET 17

3.1 Russian Car Parc 17

3.1.1 Structure of Car Parc by Age 18

3.1.2 Structure of Car Parc by Models 19

3.1.3 Car Parc in Regional Markets 22

3.1.3.1 Passenger Car Parc of Moscow 24

3.1.3.2 Passenger Car Parc of St. Petersburg 26

3.1.3.3 Passenger Car Parc of Krasnodar Region 26

3.1.3.4 Passenger Car Parc of Kaliningrad Region 27

3.1.3.5 Passenger Car Parc of Primorskiy Region 28

3.1.3.6 Passenger Car Parc of Novosibirsk Region 29

3.1.3.7 Passenger Car Parc of Rostov Region 30

3.2 Passenger Car Sales and Imports 31

3.2.1 Size of Market 31

3.2.2 Sales Drivers 38

3.2.2.1 Car Loans 38

3.2.2.2 Local Production Projects of Foreign Car Makers 39

3.2.2.3 Dealership Networks / Distribution Systems 43

3.2.2.4 Consumer Preferences 49

4 RUSSIAN COMPONENTS AND SPARE PARTS MARKET 51

4.1 Market Size for Components and Spare Parts 51

4.1.1 Primary Market 51

4.1.2 Secondary Market 56

4.2 Distribution System for Spare Parts 61

4.3 Consumer Behaviour Regarding Car Service and Spare Parts 68

5 APPENDICES 71

5.1 Districts and Regions in Russia 71

5.2 Population and Area in Regions 72

5.3 Major Russian Cities 75

5.4 Regions by Level of Economic Development 80

5.5 Regional Passenger Car Parcs 82

5.6 Custom Regulation for Car Imports 86

5.6.1 New Cars 86

5.6.2 Second-hand Cars 86

5.6.3 Non-Compliance with Euro 2 Norm 87

5.7 Sales of Foreign Brands in Russia, 2005-2007 88

5.8 Sales by Car Models Q1 2006 to Q1 2007 90

6 ABBREVIATIONS 92

Figure 1: Russia - Country Facts, 2007 9

Figure 2: Russian Federal Districts 9

Figure 3: Population development, in 1.000, 2005-2009 10

Figure 4: Development of Nominal GDP, USD bn., 2004-2010 11

Figure 5: Development of GDP Growth Rates, Change in % to Previous Year, 2001-2010 11

Figure 6: Development of Real Income / Capita, in Rouble, 2000-2010 12

Figure 7: Comparison of Key Figures EU / Russia, 2006 13

Figure 8: Share of Leading Regions in Total GDP, 2006 14

Figure 9: Income per Capita in Regions, 2006 15

Figure 10: Growth of Retail Expenditures per Capita, 2006-2009 16

Figure 11: Leading Regions by Share in Total Volume of Retail Trade, 2006 16

Figure 12: Development of Passenger Car Parc, Total and Foreign, in mio., 1993-2010* 17

Figure 13: Passenger Car Sales in Russia and Selected European Countries, 2005-2010 18

Figure 14: Structure of Russian Car Parc by Age in 2006 19

Figure 15: Top-Ten Brands in Russian Car Parc, 2006 20

Figure 16: Car Parc of Foreign Brands in Russia, in 1.000, 2007 21

Figure 17: Popular Models among Foreign Brands in Russia, 2007 22

Figure 18: Passenger Car Parcs of Federal Districts, 2006 23

Figure 19: Rating of Regional Car Parcs by Number of Vehicles, 2006 24

Figure 20: Moscow Car Parc: Top 10 Foreign Brands, in 1.000, 2006 25

Figure 21: St. Petersburg Car Parc: Top 10 Foreign Models, in 1.000, 2005 26

Figure 22: Krasnodar Region Car Parc: Top 10 Foreign Models, in 1.000, 2006 27

Figure 23: Kaliningrad Car Parc: Top 10 Foreign Brands, in 1.000, 2005 28

Figure 24: Primorskiy Region Car Parc: Top 10 Foreign Brands, in 1.000, 2006 29

Figure 25: Novosibirsk Car Parc: Top 10 Foreign Brands, in 1.000, 2005 30

Figure 26: Rostov Car Parc: Top 10 Foreign Brands, in 1.000, 2005 31

Figure 27: Relative Sales and Import Structure of Car Market, 2002-2010 32

Figure 28: Sales and Import Structure of Car Market, 2002-2010 32

Figure 29: New Car Sales: Foreign and Domestic Brands, 2002-2010 34

Figure 30: Sales of Foreign Car Brands, 2005, 2006, Q1 2007 36

Figure 31: Sales of Foreign Car Models, 2005-2006 37

Figure 32: Cars Bought on Credit, in 1.000, 2003–2007 39

Figure 33: Production of Foreign Car Brands in Russia, in 1.000, 2005-2006 41

Figure 34: Planned Local Production for Foreign Cars in Russia up to 2010 42

Figure 35: Largest Dealership Networks of Foreign Brands in Russia, 2005-2007 44

Figure 36: Dealer Centers Opened in the Third Quarter of 2006 46

Figure 37: Major Russian Automobile Dealer Companies 47

Figure 38: Selected Second-Hand Car Dealers in Russia 48

Figure 39: Key Criteria Influencing Car Choice in Russia, Single-Choice 49

Figure 40: Car Buyer’s Preferences Depending on Income Size 50

Figure 41: Automotive Parts Market for Russian and Foreign Brands, USD bn., 2002-2010 52

Figure 42: Major Russian Component Suppliers 54

Figure 43: Foreign Component Supplier Projects in Russia 55

Figure 44: Size of Russian Spare Parts Market, USD bn., 2006-2010 59

Figure 45: Spare Parts for Foreign Cars: Top-6 Positions, USD mio., 2006-2010 59

Figure 46: Market for Brake Shoes, Foreign & Russian, USD mio., 2006-2010 60

Figure 47: Market for Shock Absorbers, Foreign & Russian, USD mio., 2006-2010 60

Figure 48: Distribution System for Spare Parts in Russia 61

Figure 49: Pricing of Service Centers on Selected Services, 2006 62

Figure 50: Large Spare Parts Importers and Wholesalers in Russia 64

Figure 51: Chains of Independent Service Centers in Russia 65

Figure 52: Where Russians Buy Spare Parts, 2006 67

Figure 53: Where Russians Get Their Foreign Car Repaired, 2006 67

Figure 54: Consumer Preferences: Original or Independent Aftermarket Spare Parts, 2006 68

Figure 55: Monthly Expenditures on Car Repair and Maintenance, 2006 69