MOSCOW, July 21 (Reuters) - The number of new and used cars sold in Russia plummeted 55 percent in the first half of 2009, and could end up falling 60 percent by the year's end if the state does not act fast, PricewaterhouseCoopers (PwC) said on Tuesday.
Previously forecast to become the largest in Europe this year, the Russian auto market is facing one of the worst years in its history. Its sum value has plunged 62 percent in the first half of this year to $12.8 billion, PwC said.
Heavy job losses and salary cuts have forced many Russians to delay auto purchases, while many banks have refused to give them affordable car loans due to the global credit drought.
'The negative effects of the global automotive crisis have been among the most serious for Russia,' saidStanley ( SXE - news - people ) Root, PwC's automotive analyst in Moscow. 'The development of the market will depend to a large extent on government efforts to revive it.'
The state has tried to boost auto lending by offering to compensate banks for lowering the price of their loans, but many analysts have said the incentives are too meagre to create a turnaround.
The decline in Russian car sales has contrasted with sales in fellow emerging market India, which has been growing for most of this year.
PwC said the 55 percent decline brought total sales to 743,000 cars for the first half of 2009, including 345,000 imported vehicles, 190,000 locally made foreign models, 200,000 Russian models and 8,000 used foreign models.
For the full year, total sales are expected to come to between 1.3 million and 1.6 million vehicles, a decline of between 50 percent and 60 percent on last year, PwC said.
In March Industry Minister Viktor Khristenko became the first senior official to predict a 2009 decline in sales of more than 60 percent, a forecast seen as pessimistic at the time.
But analysts and industry insiders, now including PwC, have gradually made their predictions more gloomy, making a 60 percent drop look more like a baseline scenario for this year.
In earlier data, the Association of European Businesses (AEB) said sales of new cars fell 49 percent in the first half, with Ford, Hyundai, Nissan ( NSANY - news - people ) and Toyota ( TM -news - people ) among the biggest losers.