ST. PETERSBURG – Russia’s new-vehicle sales are dropping precipitously due to a complex business environment and uncertain geopolitics.
Volume plunged to 82,600 units in March, according to latest data from the Association of European Businesses (AEB), a decline of 45% from year-ago. For entire Q1, sales fell 26% to 254,000 light vehicles.
Prior to February 2025, the industry had been recovering from its 2022 collapse, with volume on a growth track since April 2023. However, at the end of last year, gains slowed due to rising interest rates and the government’s decision to introduce recycling fees. In addition, the prolonged effect of sanctions has applied additional pressure.
The Lada brand dominates the market, with a 31% share, up from 28% a year ago. Among the other best-selling brands are China’s Haval and Chery.
The current market situation remains complex, mainly due to expensive automotive loans costing up to 30%-40% per annum, the pending return of some departed brands and continuing buyer expectations of price discounts from automakers and dealers.
The market has had to resort to discounting due to large stock of vehicles on hand, most of which are from Chinese brands. In order to sell them, some Chinese automakers and their dealers already have begun offering discounts of up to 1 million rubles ($12,000).
Meanwhile, the ever-deteriorating economic situation in Russia and the possibility some global automakers may return to the market has sparked serious concern from local producers, particularly the Russian flagship automaker AvtoVaz, which believes the re-entry by foreign automakers may upset the balance in the Russian automotive market and significantly cut into its market share.
Russian media has reported on calls the company reportedly has made to the national government to lobby against the potential return of one of its major rivals of the past, France’s Renault Group.
While AvtoVaz has denied these reports, most analysts believe the possible return of global automakers such as Hyundai and Renault may create serious problems for the Russian automaker, especially given the current weak demand for cars in the local market.
AvtoVAZ chief Maxim Sokolov recently noted that Russia imported nearly a half-million vehicles in 2024, which he says has led to unprecedented and unjustified dumping, primarily from Chinese automakers.
In general, most analysts expect 2025 to be one of the worst years in the history of the modern Russian car market, as sales are unlikely to exceed 1 million units (compared with 1.6 million units in 2024).
Additional pressure will be put on the market by the current trade wars. As analysts of the Russian Vzglyad business paper predict, a number of Chinese brands whose profits are under pressure may leave the market this year, while many local dealerships may be forced to declare bankruptcy.
Finally, Russian automakers, particularly AvtoVaz, likely also will be forced to revise their production plans this year, analysts believe.
