Just 55,000 new cars and light commercial vehicles were sold in Russia last month, down 63% from March 2021, according to data released on Wednesday by the Association of European Business (AEB), a group representing foreign investors represents in Russia, have been published.
All brands – European, American and Asian – suffered losses, but among the top sellers, Volkswagen was hardest hit, with sales plummeting 74%, followed by the Škoda brand and the German group Toyota (TM). In February, overall sales fell just 4.8%, federation data showed.
Lexus, Toyota’s luxury brand, was also hit hard, with sales plummeting 91%, the largest of any brand. Porsche, also part of Volkswagen (VLKAF) Group, saw a 73% drop in sales.
Western automakers balked after Russian President Vladimir Putin’s decision to invade Ukraine in February. Toyota and Volkswagen were among a number of companies to announce last month that they had halted production and halted exports to the country.
French Renault, which owns Russian automaker AvtoVAZ, recently said it was halting all activity at its Moscow plant and was “assessing available options” regarding its stake in the company.
The collapse of the ruble also pushed up the average price of a new car in Russia by 35% to 45% in March, according to Russian auto market analysis website Autostat.
But splashing out on a new car will likely be low on most Russians’ priority list. Since the invasion, annual inflation in Russia has risen to almost 16%, Reuters reported. Prices of staples, including sugar and tomatoes, have skyrocketed and there have been reports of shortages in supermarkets following a wave of panic buying.
An opening for China?
Domestic car models like the AvtoVAZ-owned Lada – an icon of Soviet-era independence – could theoretically benefit from the lack of foreign competition. But the sanctions have disrupted supply chains, leading to a serious shortage of spare parts.
The company has brought the company-wide summer vacation forward to April and announced it will switch to a four-day week for three months from June to try to save the jobs of more than 40,000 employees. The company says it is also designing new versions of several Lada models to reduce its reliance on imported parts.
Chinese automakers could benefit from 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 possibility that more will look for a Russian manufacturing base in the future,” she said.
Chinese companies Great Wall Motors and Geely both posted strong first-quarter sales growth in Russia and suffered smaller losses than western peers in March.
— Clare Sebastian and Chris Liakos contributed to this report.
