The Russian car market is literally devastated from start to finish by international sanctions related to the war in Ukraine. There are no more buyers. New car sales plummeted nearly 80% in April. Vehicles over 50,000 euros can no longer be imported into the country under the sanctions and the price of spare parts has increased by more than 30% in two months.
It’s as if someone had pressed the big red stop button, explains Russian car market expert Alexander Pikoulenko: “It is absolutely not known how many cars are to be produced and how many customers there will be to buy them. The fact is that the market is now dictated by the buyer who has less and less money.
“We currently have a production capacity of three million new cars a year. Let’s say the market is to halve.”
Alexander Pikoulenko, automotive expertat franceinfo
Currently, all car factories in Russia are on standstill due to the shortage of components that are no longer delivered to the country. Manufacturers are faced with a depletion of stocks of electronics, technical rubber products, gears and bearings. “There is a list of 240 missing components”, believes the automotive expert. According to Alexandre Pikoulenko, manufacturers always have the possibility of calling on other suppliers or of producing these parts “locally”. “But, it will take time, because it takes 4-7 months to set up supply chains.”
The Russian government, which has just taken over the management of Avtovaz, the Lada manufacturer that Renault sold to it and its 45,000 employees, must therefore find solutions. He has just issued a decree that allows the production of cars without ABS brakes, airbags and other safety equipment. A decision with serious consequences for Alexander Pikoulenko: “It’s a big tragedy for those who are going to buy these cars. The government allows the manufacture of cars without safety systems.”
“We already have too many fatal accidents on our roads. And we could have 2,000 or 3,000 more because you have cars without ABS. Nothing can justify such a decision.”
Alexander Pikoulenko, Russian automobile expertat franceinfo
The government decree also cancels the European emission standards. Manufacturers will therefore be able to produce cars in Russia that will pollute as much as in 1988.
In the meantime, some dealers are trying to circumvent the sanctions to continue to ensure a sufficient stock of new cars, says Alexander Pikoulenko: “I know there is channels that are set up via the Arab Emirates. You can also receive cars via Georgia, and the port of Batumi without any problem. From there, the vehicle can be transferred to Russia. But all this happens on small volumes, over the counter and this doubles or even triples the price of the car. We spent twenty years in Russia to set up a structured, modern automobile market. And now we’re back to a very strange, totally wild market.”