Sanctions, Production Halts, and Reduced Purchasing Power... Russia's Car Sales Down 60%

European Business Association Reports March Russian Car Sales
270,000 Units in Q1... 28% Decrease YoY

Lada showroom in Khimki, north of Moscow, Russia

[Asia Economy Reporter Choi Dae-yeol] Due to international sanctions following the invasion of Ukraine and the boycott by global automakers, sales of finished vehicles in Russia last month dropped by more than 60% compared to a year ago.

According to data from the European Business Association on the 6th (local time), last month's vehicle sales in Russia totaled 55,129 units (including commercial vehicles). This represents a decrease of about 63% compared to March of last year (148,676 units). AvtoVAZ, considered a local leader, sold 12,289 units, down 64% from a year ago, while Kia (6,336 units) and Hyundai Motor Company (4,909 units), ranked second and third respectively, also saw decreases of 68% each.

Other brands with high local market shares such as Renault, Toyota, ?koda, and Volkswagen also experienced declines of over 60% compared to the previous year. In the first quarter of this year, total new car sales in Russia amounted to 277,332 units, down 28% from the same period last year. The ranking of sales volume by brand remains the same as last year: AvtoVAZ, Kia, Hyundai, and Renault.

Russia March Complete Vehicle Sales Performance by Brand

Russia's new car market has historically fluctuated depending on external factors such as oil prices. When oil prices are high and incomes are ample, sales increase; otherwise, the new car market tends to freeze. Due to logistics difficulties caused by the invasion of Ukraine, parts supply has become challenging, leading major manufacturers including Hyundai Motor Company to halt operations at local factories, making it impossible to produce and sell as usual. According to foreign media, Hyundai Motor expects it will be difficult to resume normal factory operations until late next month.

With the depreciation of the local currency due to international sanctions, consumption of expensive goods like automobiles inevitably decreases. It is reported that Russian citizens have increased spending mainly on daily necessities in preparation for the economic downturn caused by the war.

As the value of the ruble has fallen, import prices have risen, and on top of that, raw material prices have surged sharply, leading to a rapid increase in car prices. AvtoVAZ is said to have raised prices three times this year. Prices of imported foreign cars have also increased by 29% compared to the beginning of this year.