Russian car sales slump as war in Ukraine drives supply and price shocks

Kazakh cars

With new cars hard to find in Russia and accelerating inflation threatening to devalue their savings, some Russians have turned to neighboring markets which have remained open to them.

Russian customers accounted for about 10% of Autodom’s sales in the Kazakh town of Kostanay, 180 km (110 miles) from the border, according to Yevgeniy Biber, the dealership’s sales chief.

They used to make up about 1% of buyers, he said.

Even before the crisis, Russia was already battling a shortage of new cars due to supply chain disruptions and distribution delays facing the auto industry globally.

Last year, sales of new Russian cars fell nearly 50% from their 2012 peak as the economy stagnated since Crimea was annexed by Ukraine in 2014.

Amid a shortage of parts needed to keep factories open, Interfax reported that AvtoVAZ plans to introduce a lightweight version of its Lada brand made with minimal foreign parts such as airbags and anti-lock braking systems.

Vehicle sales in March were among the worst in 15 years, according to Azat Timerkhanov of Russian consultancy Autostat.

“If Europe does not restore deliveries, China will be the biggest beneficiary, at least in terms of market share,” Timerkhanov said. “But volumes will continue to decline.”