This key indicator shows how bad it is in Russia

Russia's car market shrank by more than 40 percent in March as carmakers struggled with the weaker currency, low consumer confidence and economic crisis in the country, according to the latest data.

Sales of new passenger cars and light commercial vehicles in Russia dropped by 42.5 percent in March 2015 from a year earlier, amounting to 139,850 fewer cars being sold, figures released by the Association for European Businesses (AEB), a Russia-based business lobby group, showed Wednesday.


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Commenting on the dire car market figures, Joerg Schreiber, chairman of the AEB Automobile Manufacturers Committee said they reflected Russia's difficult economic backdrop.

"Total market performance in March is bad, of course, but not much worse than expected," he said in a statement accompanying the data.

"What we are seeing now in the sales statistics is the long-predicted 'hole' in consumer demand, caused by the pull-ahead of car purchases at the end of last year, and compounded by heavy price inflation in the current year."

Sounding a confident note, Schreiber added that "sooner or later, the situation will stabilize, but we are not at this point yet."

The data comes as Russia's economy heads for recession on the back on the decline in global oil prices and international sanctions placed on Russia for its annexation of Crimea and role in the conflict in Ukraine last year.

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The sanctions and lower oil revenues have had a knock-on effect on the domestic economy which hit the ruble hard, in turn, putting pressure on import prices. As it stands, consumer prices in Russia rose 16.9 percent in March, year-on-year.

Showing that Schreiber's confidence that the economic situation might be turning a corner, Russia's rate of inflation appears to be slowing, and the ruble has rebounded this year, coming back from a low of 70 rubles to the dollar in February to currently trade around 52 against the greenback.

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt. Follow us on Twitter: @CNBCWorld