With stocks of new, medium-priced cars built by Western manufacturers having fallen literally into the hundreds, Russian consumers are turning to domestic and Chinese models and used cars, many of them from Japan.
Representatives of Volkswagen, Kia, Skoda, Citroen, Opel, Renault and Hyundai say they can offer a total of no more than 300 of their most affordable models in what at the end of 2021 was the world’s 11th-largest market by sales, the Izvestia business paper reports.
The Russian Automobile Dealers Assn. says its members sell domestically built Ladas and Chinese models, but they have only a few dozen cars from Western manufacturers available.
“If we talk about real reserves, they are currently estimated at only (in the) tens. Some brands, such as Renault, have completely disappeared,” an association spokesman says.
The dearth of Western automakers’ light vehicles comes against a backdrop of steep declines in Russian auto sales and production in 2022, when the invasion of Ukraine triggered economic sanctions, supply chain disruptions and foreign manufacturers’ withdrawal from the market.
Light-vehicle sales in Russia in 2022 totaled 687,370, a 58.8% decline from 1,666,780 a year earlier, according to Wards Intelligence data. Production came to 448,246 units in 2022, down 67% from 1,349,339 prior-year, Wards Intelligence data shows.
Russian consumers who can afford cars whose prices have increased by 50% or even 100% mainly have a choice of domestic Lada models produced by AvtoVAZ or Chinese models.
However, even sales by AvtoVAZ, Russia’s leading automaker, declined 46.2% in 2022 from year-ago. Sales of Chinese models also declined with the exception of Chery, which saw deliveries increase 31.4% last year, Wards Intelligence data shows.
Russian analysts do not expect sales of Chinese cars to increase significantly because of their relatively high cost and the uncertainty of consumers’ purchasing power. A base Geely model sells for almost RR1.9 million ($23,000).
In recent months some Iranian and Indian automakers have announced intentions to expand into the Russian market, but most local analysts say such prospects are vague.
AvtoVAZ representatives have said supply chains have stabilized and in 2023 the automaker intends to nearly double production and turn out more than 400,000 cars, compared to 220,000 in 2022.
Analysts expect that some popular Russian cars and inexpensive Chinese cars will be in demand among taxi drivers and car-sharing services, as replacements for models including the Hyundai Solaris, Kia Rio, Volkswagen Polo and Skoda Rapid.
Small numbers of premium and luxury cars are being imported into Russia from countries such as Turkey, Armenia and Kazakhstan by former distributors and others. These so-called “gray market” cars are selling for twice their market value due to factors including markups by intermediaries and logistics costs.
In the meantime, used cars remain available in the Russian market. Exports of used cars from Japan alone increased by one-third in 2022, to more than 200,000. Japan and other G7 countries oppose a U.S. proposal to embargo all exports to the Russian Federation.
As with new cars, used cars are being marked up 50% to 100%.