Russia’s Auto Market Grapples with Soaring Interest Rates
(MENAFN) Russia’s car and truck industry is grappling with a severe downturn driven by soaring interest rates, extensive Western sanctions, and intensifying competition from Chinese manufacturers reshaping the market landscape.
Before the conflict in Ukraine, Western brands like Toyota, BMW, Skoda, and Audi held sway over Russian car sales. Now, Chinese manufacturers such as Chery, Geely, and Voyah have seized that space, causing a sharp decline in both imports and domestic sales.
Data from Russia’s Industry and Trade Ministry and local analytics firm Avtostat reveal a 26% plunge in new car sales during the first seven months of 2025, totaling just 742,000 vehicles.
Vehicle imports dropped a staggering 63% in the first half of the year to 149,300 units. Chinese imports dominated, accounting for 77% of this total, followed by Kyrgyzstan at 8%, and Belarus at 4.7%.
Western automakers withdrew following Russia’s February 2022 invasion of Ukraine. Notably, Renault transferred its Avtovaz stake and Moscow plant to the government for a symbolic one ruble; this facility now produces Moskvich vehicles. Nissan also handed over its assets, including a factory in St. Petersburg, which now manufactures Lada cars.
Mercedes, Volkswagen, and Toyota ceased production entirely, with some plants now targeted for joint ventures alongside Chinese companies.
With Western firms exiting, Chinese brands rapidly filled the void. In June, Lada led the market, trailed by Chinese marques including Haval, Chery, Changan, Geely, Jetour, and GAC.
However, an oversupply crisis has forced the closure of 360 Chinese car dealerships in the first half of 2025, according to Gazprombank. Reports indicate that up to 10 Chinese brands may exit Russia within the year.
Russia’s leading domestic producers, Avtovaz and Kamaz, have reduced working hours at several plants amid weak demand and a surplus of foreign components.
The government has banned sales of Chinese-made trucks from brands like Dongfeng, Foton, Faw, and Sitrak, though no restrictions have yet been imposed on Chinese passenger cars.
This industry upheaval signals deep uncertainty ahead for Russia’s automotive sector as it struggles to navigate mounting economic and geopolitical pressures.
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