Russian car sales have plummeted since the invasion of Ukraine

CNN Business

Auto sales in Russia fell by nearly two-thirds in March as the war in Ukraine and Western sanctions and an exodus of foreign companies wreaked havoc on the country’s economy.

Just 55,000 new cars and light commercial vehicles were sold in Russia last month, down 63% from March 2021, according to data released Wednesday by the Association of European Business (AEB), a group representing investors. foreigners in Russia.

All brands – European, American and Asian – suffered losses, but the hardest hit among the big sellers were Volkswagen, whose sales fell 74%, followed by the German group brand Škoda and Toyota (TM ). In February, overall sales fell just 4.8%, according to association data.

Lexus, Toyota’s luxury brand, was also hit hard: sales plummeted 91%, the biggest of any brand. Porsche, which is also part of the Volkswagen Group (VLKAF), saw its sales fall by 73%.

Western automakers raced for the exit following Russian President Vladimir Putin’s decision to invade Ukraine in February. Toyota and Volkswagen were among a series of companies that announced last month that they had halted production and exports to the country.

French Renault, owner of Russian automaker AvtoVAZ, recently said it was suspending all operations at its Moscow plant and “evaluating available options” regarding its stake in the company.

The ruble’s collapse also pushed up the average price of a new car in Russia by 35-45% in March, according to Russian car market analysis site Autostat.

But splashing out on a new car will likely fall low on most Russians’ priority list. Since the invasion, annual inflation in Russia has soared to almost 16%, Reuters reported. The price of staples, including sugar and tomatoes, has soared, and shortages have been reported in supermarkets after a wave of panic buying.

Domestic car models like the AvtoVAZ-owned Lada – an icon of Soviet-era autonomy – could, in theory, benefit from the absence of foreign competition. But the sanctions have snarled supply chains, leading to severe parts shortages.

The company brought forward the company-wide summer vacation to April and announced it would move to a 4-day week for three months from June in an attempt to save more jobs. of 40,000 employees. The company says it is also designing new versions of several Lada models to be less dependent on imported parts.

Chinese automakers could capitalize on the departure of Western brands, said Carol Thomas, analyst for Central and Eastern Europe at consultancy LMC Automotive.

“Chinese brands will no doubt see the current situation as an opportunity and there is a chance that others will seek to establish a Russian production base in the future,” she said.

Chinese companies Great Wall Motors and Geely posted strong sales growth in Russia throughout the first quarter and suffered smaller losses than their Western rivals in March.

Clare Sebastian and Chris Liakos contributed to this report.


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