The company’s comments come as the Association of European Businesses reports that the Russian passenger car market posted a 27.5% y/y decline in sales in July as the ongoing accelerated slump continued with sales falling to 131,087 units.

IHS said that while July's result at least looked more favourable than in recent months, with a decline of 36% y/y in the first half of the year, the result in July is actually the result of a low base comparison as the market started to experience the depressive effects of a faltering economy at the same time last year.

In terms of the leading manufacturers operating in the Russian economy, AvtoVAZ's leading Lada brand once more marginally outperformed the overall market as had been the case for most months in 2015 with a decline of 25% y/y to 20,944 units. This left the brand's YTD sales at 161,630 units for the first seven months, a fall of 27% y/y which was significantly above the overall market decline.

In response, IHS Automotive principal analyst, Tim Urquhart said: “The Russian light-vehicle market continues to experience a perfect economic storm as a result of the ongoing weakness of the Russian economy, thanks to the low level of the rouble, sanctions due to its support for rebels in Eastern Ukraine and low oil and gas prices. There seems little short-term relief for carmakers and dealers operating in the market and for production facilities, where utilisation rates are at record lows. This is causing strains throughout the system with the head of the Russian dealers association warning that up to 1,000 dealers could close as a result of the sales slump.

“In terms of the wider macro situation in Russia official estimate of GDP growth in full-year 2014 came in at 0.6%. Seasonally adjusted quarterly and revised GDP figures show a quarter-on-quarter (q/q) decline in the fourth quarter of 2014 at 0.6%. Thus, the Russian economy was already on the verge of recession at end-2014.

“With the q/q decline in the first quarter 2015 now put at 1.3% on a seasonally adjusted basis, Russia has seen an official descent into recession. A number of negative factors were already aligned, even before the threat of economic sanctions on Russia arose. The Russian economy remains overly dependent on energy export revenues (fully 65.3% of total export earnings in 2014) to drive domestic growth. IHS now has GDP contracting by 3.8% in 2015 and declining a further 0.6% in 2016. A modest recovery is expected in 2017, with growth at 1.2%.”

He concluded: “For the full year IHS Automotive is forecasting sales decline in light-vehicle sales of 35.2% y/y which is exactly in line with the current rate of decline to 1.62 million units.”