MOSCOW -- The Russian auto market will overcome its current slump and overtake Germany to become the largest in Europe - and the fifth biggest globally - by 2020 as car ownership increases, a Boston Consulting Group study said.
Western carmakers including General Motors, Volkswagen, Ford Motor and Renault have invested heavily in Russia on expectations that the market will grow as a rising middle class buy cars for the first time or upgrade aging models.
The study predicts that Russia can follow Brazil and China in transforming itself from a market targeted by foreign exporters, to one with a dominant share of locally-produced vehicles.
Boston Consulting forecasts that Russia's auto market will grow by an average annual rate of 6 percent through 2020, when it will reach annual sales volume of 4.4 million, up from 2.9 million in 2012.
That would make it the fifth largest in the world by sales, after China, the United States, India and Brazil. Last year, Russia ranked seventh in the world after China, the U.S, Japan, Brazil, Germany and India. In 2009 it was tenth largest.
However, Boston Consulting warned that that Russia still needs to overcome serious hurdles, including volatility in demand, a weak supplier base and high logistics.
Study co-author Nikolaus Lang, said annual vehicle sales in Russia will grow if the government creates a stable market environment and "if the industry professionalizes along the whole value chain, from developing cars to producing components to manufacturing the cars and selling them."