“The return of banditry”: the Russian automobile industry gives in under the sanctions | Russia

EIdar Gadzhiev’s heart sank when he heard the crackle of his Skoda’s engine one day in April. Gadzhiev, who owns a fleet of four cars which he hires out as taxis in Moscow, knew this was a terrible and expensive time for a breakdown.

The prices of spare parts, if you could even find them, had spiraled out of control since Vladimir Putin had ordered the invasion of Ukraine two months earlier. “I understood that I was in a bad situation,” he said. “I thought: the repairs will cost as much as the car.”

Dealers were useless, he said. His auto parts store told him the waiting list was months long, the time he couldn’t wait to fix his vehicle.

So he tried to post on a public chat. That’s when his phone started “exploding,” he said. He received dozens of calls, some from rude “dealers” offering to meet him or making vague promises of getting the parts he needed.

“It’s pure speculation,” he said. “There are no more spare parts. So the prices are too high anyway, you could almost [throw away] the car, or you think: is it illegal?

He suspected that many of the pieces offered to him had been stolen. “It’s the return of banditry,” he added.

Few sectors of the Russian economy are feeling the pressure of the country’s near-total isolation more than the auto industry, where parts for new and used vehicles are in short supply.

Gadzhiev said he ended up paying eight times the old rate for his repairs. Others say prices have increased tenfold.

Aleksei Atapov, the owner of a car repair business, said: “We are in a rather sad situation in terms of car repair and maintenance in Moscow. The central warehouses closed at the end of February, and even the custom parts that arrived were not delivered to us. They returned the money and took all the coins overseas.

“Because of these rate jumps, they just stopped all activity. Central warehouses are our everything. Two weeks after February 24 [the day of the invasion], auto parts speculation has reached its peak. Something that cost 900 rubles (£12.50) would cost 7,000-7,500 rubles. The original car oil would cost 12,000 instead of 1,200.”

While the Russian government has promoted its import substitution and “parallel import” policies, which allow importers to ignore bans on sending spare parts to Russia, the plan has barely begun to materialize and supply is unlikely to meet demand anytime soon, analysts said. Meanwhile, anecdotal evidence suggests that counterfeit and stolen coins are flooding the market.

The market is trying to adapt. Wildberries, a Russian online retailer, added auto parts including engines, fuel systems, transmissions, chassis parts and others, the company said.

But for now, market participants say stocks have reached depletion. “All the substitutes ran out very quickly,” Atapov said.

Shortages also affect new cars. Avtovaz, Russia’s largest automaker, announced an extra week of furlough for workers due to a shortage of foreign parts, especially semiconductors. Car sales in Russia fell 83.5% in May, the Association of European Businesses (AEB) said on Monday, and prices for new cars rose by an average of 50%.

The new Lada Grantas produced by Avtovaz will lack key safety features, including anti-lock braking systems and airbags, as well as emissions restrictions and satellite navigation systems.

The situation may be even more worrying in Russia’s aviation industry, where airlines are cannibalizing their fleets for parts while seeking out any new import sources they can find.

“The main problem is that the service companies, the companies that maintain and certify the Airbuses and the Boeings and distribute the papers allowing the planes to fly to Europe, are no longer authorized to issue these papers,” said an executive. superior of Sukhoi Superjet. . “We started cannibalizing some planes, using parts of a few older planes to power the new ones.”

A pilot who regularly covered mid-haul flights to the UK and other European destinations for his airline wrote that the situation was ‘screwed’, adding that he felt his company was ignoring safety issues that were regularly raised by the pilots.

“The solution is either parallel imports or the government will have to move in quickly to build Russian planes,” the Sukhoi official said. “I give the Russian aircraft industry a year if nothing changes.”

Russian Nordwind Airlines pilot Maxim Pyrkov posted a photo from Moscow’s Sheremetyevo Airport showing the company’s recently leased 777s parked on the runway “waiting for better times, if they come, of course.”

He writes: “According to my information, some [Russian] the airlines have enough wheels and pads in their warehouses for up to another month. Looks like we’re gonna have to find a way to get into the spare parts black market. Hello Chinese! This way!”