On Wednesday, President Vladimir Putin urged the Russian government to rein in automobile costs after an industry executive warned that Western sanctions might cause yearly sales to go below 1 million for the first time in records.
According to Maxim Sokolov, CEO of Avtovaz, the largest automaker in Russia, auto sales have dropped more than 60% so far this year and may wind up being less than a quarter of what they were ten years ago.
Some of this year’s drop is due to the pullout of foreign carmakers such as Renault and Mercedes-Benz and a collapse in demand due to a mass mobilization for the Ukraine conflict.
But much is also due to falling living standards and higher prices, as well as the difficulty of securing foreign-made components after the imposition of a barrage of sanctions by Western countries in response to Russia’s military campaign in Ukraine; the latest Lada model has had to be produced without airbags or anti-lock brakes.
Speaking with top officials, Putin acknowledged that the situation was “not easy” and asked the government to look at making cars more affordable, suggesting that prices were being raised unfairly.
Trade Minister Denis Manturov told Putin that assembly lines were being ramped up at Russia’s domestic carmakers – including Avtovaz , maker of the Lada and a Renault subsidiary until May, GAZ, Kamaz and UAZ.
Painting a rosy picture, he said production of the Moskvich (“Muscovite”), a Soviet-era brand that fell into obscurity after the fall of the Soviet Union – would resume by the end of the month, in a plant taken over from Renault.
He also noted, however, that the market had been supported by loans and subsidies for manufacturers, and said 55,000 vehicles had been sold with government support this year.