Russian car sales fell 84% in May as sanctions and international isolation put an industry that was once a hub for foreign investment to a near halt.
According to the Association of European Businesses (AEB), less than 25,000 vehicles were sold last month, which is the lowest level since at least 2006. It also represents less than one-tenth of peak month sales in the past.
The US and its allies launched a series of sanctions against President Vladimir Putin for his February 24th invasion of Ukraine. They also disrupted supplies from other countries. The isolation of the foreign-dominated automotive sector was particularly severe due to its heavy dependence on import components.
Azat Timerkhanov, consultant Avtostat, stated that “a few suppliers haven’t yet sold out all of their stocks so that’s why it’s selling.” They’re selling out quickly, however.
He said that only two of Russia’s 20 auto factories are currently operating, one locally owned and one from China. European and Asian producers have suspended the shipment of cars while companies from other countries were confronted with logistical problems.
He said that there is a search for alternative suppliers, usually Chinese, but it’s not certain yet that it will succeed.
Russian authorities have taken over major plants that were left by foreign companies, including the iconic Moskvich factory in Moscow. They have already made plans to sell models stripped down without the use of imported safety or emissions technology.
“Our auto industry was dependent on foreign components,” Georgy Ostapkovich of Moscow’s Higher School of Economics, said. “There were virtually no factories that couldn’t operate on foreign platforms. Russia was a mere assembly line.
He stated, “We are facing primitivization, and we’ll fall behind by a decade to the rest of the globe,”
