Outlook Grim for Russian Auto Industry

Analysts say Russia's auto industry is doomed to meager profits at best even if annual sales climb to 3 million units from an expected slump to 1.8 million in 2015, Reuters reports.

Car sales have been battered by a weak ruble and an economy hurt by foreign sanctions prompted by Russia's role in unrest in Ukraine.

Researchers Evercore ISI estimate Russia has installed capacity to make 3.5 million passenger vehicles per year. The general director of online car-buying service Auto-dealer.ru tells Reuters at least 70% of cars sold in Russia are being sold at a loss.

The Russian Assn. of Automobile Dealerships estimates foreign carmakers are losing as much as $2,000 per vehicle sold.

The gloomy outlook has prompted General Motors Co. to begin phasing out local production. Other carmakers are staying on in spite of likely losses for at least a year, mainly to protect their ability to capitalize on a market rebound.