Russia’s car market was described as having “endemic volatility” for its never-ending boom-and-bust cycles since entering the post-Soviet era. But it hadn’t experienced a bust quite like the one that followed Russia’s invasion of Ukraine.
Sales have collapsed 60% in the first nine months of the year, compared with 2021, according to figures from the Russia-based Association of European Businesses.
The foreign brands so beloved of Russia’s rich and middle classes have largely halted both production and imports in response to sanctions put in place to punish Russia for its brutal war in Ukraine.
Through September, sales of Mercedes-Benz were down 73%, BMW down 74%, Skoda down 77% and Toyota down 73%. Month by month it worsened, as the remaining stock dried up. Lexus, for example, sold just 13 cars in September.
More car makers are following Renault out of the door as executives struggle to see any near-term improvement in Russia’s hard-line political stance when it comes to Ukraine.
Renault moved quickly in April to transfer its 68% stake in AvtoVAZ to Russia’s NAMI institute, which also builds the Aurus limos for president Vladimir Putin.
Others were slower, but are now abandoning any wait-and-see policy. In September, Toyota said it would close its plant in St Petersburg amid shortage of parts and indicated it could sell it. Nissan, meanwhile, took a $687 million (£615m) hit in October after selling to NAMI for €1 with the right to buy the business back within six years, mirroring partner Renault’s deal.
Mitsubishi and Mazda are both reportedly looking for a buyer for their plants, while VW has shuttered its production and exited an agreement with Russia’s Gaz Group to build Skodas and VWs at its Nizhny Novgorod site. BMW has halted production at contract manufacturer Avototor at Kaliningrad.
The market might be on its knees, but it’s not dead. Lada sales were actually up in September as demand for the entry-level Granta saloon model soared. Already a low-tech hangover from the days before Renault entered into a joint venture with AvtoVAZ in 2012, the Granta was further stripped of hard-to-source electronics and is now by far Russia’s best-seller, notching up 13,421 sales in the month. Second was the similarly low-tech Lada Niva off-roader (pictured below), another survivor, with sales of 3439, more than double than in the same period last year.
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Renault and Nissan were engulfed by NAMI, hereafter renamed ZUNAMI