The Russian auto industry is in trouble: the figures confirm the collapse

Car prices rose about 40% in March as automakers from Toyota to VW halted production.

Car sales in Russia tumbled last month as sanctions over invading Ukraine hit the ruble and many global automakers joined the boycott of the country, leaving buyers facing halls of empty exhibition.

Sales of new vehicles fell 60% in March from the previous month at Rolf, Russia’s largest dealership, according to CEO Svetlana Vinogradova. She estimates that demand will halve this year, to a level similar to that of Spain, which has a third of Russia’s population.

Rolf’s decline was in line with the general market, which fell 63 to 55,129 units, the European Business Association said. Russia’s first-quarter sales fell 28% to 277,332 units, according to the United States.

The slump in car sales is accompanied by a refocusing of consumer spending on the essentials as they prepare for a war-torn recession. Vehicle prices are estimated to have risen by 40% in March as automakers from Toyota to Volkswagen halted production in Russia in an unprecedented international boycott.

High prices

As buyers face higher prices and fewer options, the government is trying to boost domestic production.

Cars imported from Europe and Japan can be replaced by Chinese and Indian models, according to Anton Shaparin, vice president of the National Automobile Union.

“A lot of people are saying that our Chinese comrades won’t leave our market,” Shaparin said, noting that prices for Great Wall Motor’s Haval cars assembled in Russia have risen 50% since the invasion. “Of course they won’t, they will milk it to the last ruble.”

This contrasts with automakers from Ford Motor to Honda no longer delivering vehicles or parts to Russia.

The Renault group has suspended operations in what is the second most important market and warned that it could reduce the value of its business.

The heavy reliance of local automakers on imported components has also caused sticker shock. The largest domestic automaker, Renault-owned AvtoVAZ, has raised prices three times this year.

Russia’s Federal Statistical Service said last week that prices for foreign cars had risen 29% since the start of the year.

China, big winner

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

Russian customers accounted for about 10% of Autodom’s sales in the Kazakh town of Kostanay, 180 km from the border, according to Yevgeniy Biber, the dealer’s sales manager.

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

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

New car sales in Russia fell nearly 50% last year after peaking in 2012, as the economy has stagnated since Ukraine annexed Crimea in 2014.

Against the background of the lack of parts needed to keep factories open, Interfax said that AvtoVAZ intends to introduce a scaled-down version of its Lada brand, made with a minimum of foreign parts, such as airbags and systems. anti-lock braking.

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

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