Russians enjoying all-time high real disposable incomes have gone on a shopping spree, buying more cars and eating out more often.

In July, 133,000 car loans worth RUB197bn were issued in Russia, surpassing the record set in the boom years of the noughties. The volume of loans was up by 57% compared to July 2023, Izvestia reports, citing information from the United Credit Bureau (UCB).

At the same time by the end of 2024, a total of 38 new food halls will appear in Russia, setting another all-time high record, according to consulting company NF Group, reports Vedomosti.

Car loans

Auto loan indicators have remained at a consistently high level for the third month in a row, according to OKB data. In July, the market showed a slight increase of 1% compared to the previous month.

The growing demand for cars has already seen the automotive market completely recover from the shock of sanctions and the exit of all the European Original Equipment Manufacturers (OEMs) almost overnight that brought the car sector to a screeching halt in 2022. (chart)

Russia saw a total of 138,951 car sales this July, just over 6,000 more cars than in July 2021, the last July of normal production pre-war when a total of 132,640 cars were manufactured. The automotive sector was one of the worst affected by the start of sanctions, but Western firms have been largely replaced by local entrepreneurs and Chinese manufacturers.

Indeed, demand for new car is so hard that the German and French makers of luxury cars are lobbying the EU to prevent sanctions on exports of their products to Belarus, which eventually end up in Russia. Exports of EU cars to Belarus surged four-fold in 2023 to $2.6bn, according to German trade statistics. The volume of exports of luxury cars to Belarus has risen even more dramatically, accounting for two-thirds of the total increase in trade, worth $1.4bn.

The average size of loans for the purchase of a car has decreased by 2% to RUB1.48mn ($17,900), the average term exceeds five years. The full cost of car loans was 20.4%, but by the beginning of August it exceeded 21%, reports Vedomosti.

The growth of the car loan market in the first seven months of 2024 amounted to 65-70% compared to the same period in 2023, according to experts. During this time, almost one million car loans were issued for RUB1.4 trillion ($15.9bn), vs last year’s 600,000 loans for RUB800bn.

According to Rosbank statistics, men (60.7%) most often buy cars on credit. The main group is made up of borrowers aged 30-50 (67.3%). Moreover, the average age in the country as a whole has increased from 39-41 to 41-42 years.

As in the previous year, more than 70% of the customers are family members with higher (77.7%) or secondary education, including a specialised education (20.6%). The share of women is growing more slowly and amounted to 39.3% in the first five months of 2024. In 2023, the distribution was 38.2% to 61.8% in favour of men, and women prefer used cars over new.

Food halls

A record number of new food halls will open this year. A total of 38 eateries will appear in 2024, up from 25 last year, according to consulting company NF Group, reports Vedomosti.

The growth of the gastromarkets has been made easier as the sudden departure of many Western retailers in 2022 left large gaps in many markets and malls that Russian entrepreneurs are now moving into.

Since Russian President Vladimir Putin imposed agricultural tit-for-tat sanctions in 2014, Russians have rediscovered their pre-Revolutionary love of food and eating out at new restaurants serving artisanal dishes has become a favourite pastime. Malls in general have been shifting their focus from shopping to entertainment and so are encouraging food vendors to set up stalls.

In general Russia’s retail trade turnover is up by 8.8% y/y during the first six months of 2024 to RUB25.842 trillion ($299.3bn) in comparable prices, Rosstat says, as the consumer boom gathers pace.

Retail sales in June 2024 gained 6.3% annually to RUB4.524 trillion ($52.4bn). In June of this year, 96.2% of the retail trade turnover was formed by trading companies and individual entrepreneurs operating outside the market. The share of retail markets and fairs was 3.8% (in June 2023 - 95.8% and 4.2% respectively).

The ratio of foods, including beverages and tobacco products, in the retail spend was 47.7% in June 2024. The share of non-foods was 52.3% vs 48% and 52% respectively last June.

NF Group reports that in the first seven months of this year, 20 gastromarkets with a total area of ​​21,000 sq. m. have already been launched across the country; most of the new projects have begun to develop in Russia’s far flung regions than the twin capitals of Moscow and St Petersburg. As bne IntelliNews reported, the surge in military wages has meant that Russia’s poorest regions have been the biggest winners from the war and gone someway to undoing Russia’s notorious income inequality. Eleven new food malls have appeared in the regions this year, while in Moscow and St Petersburg only gained six and three, respectively, despite the fact that Moscow pioneered the format with the Danilovsky Market that opened in 2017.

Altogether Russia has a total of 137 gastromarkets operating in the country with a total area of ​​370,000 sq. m., half of which - 67 facilities with an area of ​​208,000 sq. m – are concentrated in the Moscow region, another 17 – in St. Petersburg and the Leningrad region (55,000 sq. m), the rest are located in the regions – 53 objects (107,000 sq. m), according to NF Group.

The regional food hall market is still far from being saturated, reports the NF Group, which will see the bulk of new projects opening in the next three to five years. The development of the industry is gradually shifting from the twin capitals to the regions, especially in the so-called millionki, or cities with over a million inhabitants, such as Novosibirsk and Yekaterinburg, as well as cities with a population of 500,000 people (Sochi, Vladivostok, Krasnodar, Samara, Rostov-on-Don).