According to the Austrian industry magazine, the Russian automotive industry is in its worst crisis in decades – and Lada, long a symbol of prosperity and national identity, is now becoming a symbol of decline. Where the new car market once sold over three million vehicles per year, today it is dominated by short-time working, consumer reluctance and foreign competition. While Chinese manufacturers are gaining market share, Avtovaz, Lada's parent company, is fighting for its future.
From boom to bust: how Russia's car market is collapsing
Just a few years ago, Russia was considered one of the fastest-growing car markets in Europe. Today, nothing remains of that glory: declining sales, rising prices and expensive loans have slowed down the market. The former success story has turned into a crisis scenario.
2022 as a turning point: the beginning of the deep slump
The slump was particularly evident in 2022 – after the start of the war in Ukraine and Western sanctions. The withdrawal of international manufacturers such as Volkswagen, Renault and Toyota left gaps that have not been filled to this day. The Russian car industry lost its most important foundation: modern technologies, investments and stable sales markets.
Short recovery, rapid disillusionment: dealers in crisis
A small upturn after the pandemic proved to be a flash in the pan. Dealers are now facing declining demand. High key interest rates and stricter rules for car loans are putting the brakes on potential buyers. At the same time, Chinese brands are flooding the market – and taking business away from Russian manufacturers.
From leading market to sideshow: the new reality
Russia, once a beacon of hope in the global automotive business, is now nothing more than a footnote. Industry giants such as Gaz, Kamaz and Liaz have had to cut back on production and put employees on short-time working. Even the start of series production of the Avtovaz model ‘Iskra’, which was touted as a beacon of hope, has been postponed until 2026 – simply because important electronic components are missing.
Old instead of new: why used cars are more in demand than new cars
While new cars are expensive and difficult to finance, the used car market is booming. Many Russians prefer to fall back on old VWs, Renaults or Skodas that were once produced in the country. Confidence in tried-and-tested models outweighs belief in new, often more expensive imported cars.
Lada in crisis: from national pride to problem child
Production is still running at Lada's main plant in Tolyatti, but uncertainty is omnipresent. After the forced holidays, Avtovaz ordered a four-day week. Officially, management speaks of ‘challenges in the market’. What they mean is falling demand, high interest rates and the growing dominance of foreign manufacturers.
What is emerging in Tolyatti is no longer an isolated case. Lada, once the pride of the nation, now stands for the collapse of an entire industry caught between geopolitical isolation and economic decline.
Source: www.hhs.se
