AEB cuts Russia car sales forecast, hopes for recovery with state support

July 3 (Reuters) - Industry group AEB on Thursday said it had lowered its forecast for Russia's 2025 car sales, but said the market was showing early signs of stabilising and that more government support and lower interest rates could support a recovery.

Russia's car market collapsed in 2022 as Western carmakers such as Renault RENA.PA and Volkswagen VOWG.DE exited the market following the start of Moscow's full-scale war in Ukraine, paving the way for Chinese carmakers to seize more than half the market in the ensuing recovery.

The Association of European Businesses (AEB) said it sees Russian car sales falling by 24% compared to 2024 to 1.25 million units. In January, the lobby group had forecasted a 15% drop to 1.4 million units.

"Looking ahead, we can expect a market recovery - provided there is government support," the AEB said, mentioning demand support programmes, which provide government money by purchasing some kinds of cars.

"We also expect the first modest cut in the key interest rate to contribute to market stabilisation, with further downward adjustments likely to bolster positive momentum," the lobby group said.

The Russian central bank cut its key interest rate by one percentage point to 20% in June and may consider a more significant cut at its next rate-setting meeting on July 25.