Russia car market seen bigger than Germany

FRANKFURT (Reuters) - Strong growth in Russia is set to make it Europe's second-biggest car market after Germany next year, the finance chief of General Motors Europe said at the Reuters Autos Summit in Frankfurt on Monday.

With new car sales of around 2.5 million in 2007 and still growing quickly thanks to booming commodities markets, Russia is set to leapfrog Britain and France next year and soon overtake Germany as well, Luca Maestri said.

"Both Russia and Ukraine have been very strong this year. As we look at the way our sales have grown in these markets I think there is going to be additional growth next year. I think next year Russia is going to be the second-largest market after Germany," he said.

The German car market is expected to be around 3.2 million units this year, analysts say.

Calling Russia "the next China" in terms of explosive growth, Maestri said it was already the same size as Italy's market and bigger than Brazil or India.

GM aims to sell around 250,000 cars there this year.

In general, Maestri expected another year of stagnant demand in western Europe in 2008.

"We would say it will probably be a bit more of the same in terms of the growth being primarily in central and especially eastern Europe," he said. "In western Europe you cannot expect significantly large growth rates."

In Germany, where the new car market has contracted nearly 8 percent through October to 2.6 million cars, Maestri said the retail business was down around a quarter so far this year.

He said he was hopeful the German market would improve in 2008.

Maestri said credit market turmoil as a result of the subprime lending crisis in the United States was not hurting car sales in Europe so far.

"I wouldn't say that the credit crunch we have seen in the U.S. and we have seen in some sectors of Europe is really spilling over into consumer financing, he said. "At least for us at this stage we haven't seen any repercussions in Europe."

(For summit blog: summitnotebook.reuters.com/)

(Reporting by Michael Shields; editing by Paul Bolding)