Spending on autos increased 64 percent to a record $33.8 billion, buoyed by $27 billion of imports, the accounting firm said today in an e-mailed report, citing data from a PwC study, Russia’s statistics and customs offices and Moscow consultant ASM.

Russia is becoming Europe’s top car market earlier than forecast by manufacturers as a 10th straight year of growth in the country’s oil-based economy coincides with declining auto sales further west. Renault SA Chief Executive Officer Carlos Ghosn said Jan. 30 that Russia would overtake Germany within two years, while Ford Motor Co. European chief John Fleming said June 7 it might do so in 2009.

“Russia may become Europe’s biggest market in 2008 after surpassing Germany in the six months,” PwC partner Stanley Root said in the report. He cited figures from Germany’s VDA trade group published July 2 which show car sales in Europe’s biggest economy rose 4 percent to 1.63 million in the first half.

Russian auto sales are likely to reach 3.8 million this year if the present level of demand is sustained, PwC said. German deliveries may total 3.2 million, according to the VDA.

Russian imports of foreign cars jumped 54 percent to 785,000 in the six months, almost half the total, and purchases of locally made foreign cars rose 41 percent to 290,000, PwC said. General Motors Corp.’s Chevrolet cars were the most popular, with sales reaching 103,735, the accountant said.

Russia will account for 20 percent of global growth in car sales through 2015, according to the report.

The accounting firm’s figures include sales of cars made in Russia by local manufacturers, cars made in Russia by foreign companies, new cars made overseas and then imported to Russia and used foreign cars imported to Russia.

Its plans for a new factory come as Russia’s vehicles markets are booming. This year its car market is expected to overtake Germany’s to become the biggest in Europe. Russia has already overtaken Germany for sales in the first half of the year after growing more than 40 per cent compared with the first six months of last year. Russia is also Europe’s biggest truck market.

PricewaterhouseCoopers has forecast that the country could double its domestic car production over the next eight years to 3.2 million units. Car sales are soaring on the back of the growing economy and rising incomes. By contrast, sales in many parts of Western Europe are falling because of the impact of the global credit squeeze and the high cost of fuel.

GM, which went into the Russian market in 1992, already has joint ventures with Avtovaz, Gaz’s rival, and with Avtotor and is building a new factory near St Petersburg. Ford, Renault and Toyota all manufacture in Russia with other brands such as Peugeot and Fiat planning to do so.

Leonid Dolgov, head of Gaz’s car operation, said the factory would produce about 300,000 cars a year. Gaz intends to compete directly with Renault, which produces the Logan in Russia. Gaz wants to price new small saloons in the $12,000 to $20,000 range to compete with the Logan and wants to complete a deal by the year end.

Yesterday Daimler, the world’s biggest commercial vehicle manufacturer, said that it wanted to buy a 42 per cent stake in Kamaz, Russia’s biggest truckmaker. Daimler also wants to build a new factory making its own trucks in Russia.

The German company said: “Along with the option of building a new factory for local assembly of Daimler trucks, the division is also studying the possibility of acquiring a stake in Kamaz that would enable the two companies to combine their development, production, and sales expertise.”

It is thought that Daimler could make a binding offer by October for Kamaz, whose market capitalisation is nearly $4 billion. Daimler said it would decide by the end of the year.

— Honda cut its sales forecasts despite first-quarter profits rising 8 per cent to 179.61 billion yen (£836 million) on strong Chinese sales. The Japanese car-maker cut its sales forecast in North America for this business year by 1.4 per cent to 1.74 million cars and world sales target by the same to 4.08 million cars.