Car sales in Russia jumped by 148.6% year-on-year in September, continuing to rebound from a massive slump in 2022, with Chinese brands expanding their market share. The Russian auto industry, heavily reliant on investment, equipment, and parts from overseas, was hit hard by the fallout from Western sanctions over Moscow’s invasion of Ukraine, with sales plunging 59% in 2022 and many foreign automakers leaving the country.
The departure of Western firms leaves local producers and Chinese companies in a strong position to seize market share as Russian drivers seek cheaper alternatives to the high-end cars they had formerly favored. Several domestic manufacturers are thriving, including Russia’s Lada, which holds the top spot in the local market with a 21% share of passenger vehicles last year. However, many buyers still complain about the thin metal skin, poor electronics, paintwork, and unsuitability of Russian roads that characterize most vehicles.
Those concerns could be a significant obstacle to recovery, as replacing vehicles with newer models would likely take time. “Without a proper replacement plan, the recovery of the Russian market will be delayed,” said Joerg Schreiber, chairman of the Association of European Businesses’ automobile manufacturers committee.
Renault was one of the first to leave, selling its majority stake in AvtoVAZ to the Russian government for a fraction of its value and with a six-year buyback option. The sale allowed Renault to refocus its operations in Europe, where demand is much stronger.
High-profile carmakers such as Volkswagen and Ford have also cut production in Russia, with some factories shuttered altogether. Ford’s Yelabuga and Naberezhny plants have stopped making passenger vehicles and are now focusing on producing commercial vehicles for export to Eastern Europe. Ford Sollers has not yet announced whether it will continue producing the Kuga, Explorer, Galaxy, and EcoSport models in Russia but has said it is assessing options.
The exit of the big Western players has left the market to a smaller group of automakers, including Geely and Great Wall, which hold a combined 16% share of the Russian market. The emergence of these firms is being helped by a strong economy and lower oil prices, which have made cars cheaper to produce.
But the need for replacement parts is a crucial problem. Many repair shops say prices have risen tenfold as the central warehouses that distribute spare parts have been cleaned out. Online general retailers such as Wildberries have started to add automotive lines to their catalogs while the government is working on policies to allow the import of substitutes. Meanwhile, local owners are starting to stock up. “We’re waiting for the new generation of car models to start arriving in the autumn, which will include the latest versions of Lada and the other top-selling models,” says Alexei Atapov, a local auto repair shop in Moscow.
