New car sales in Russia have dropped by 58.8% as Russians spent 52% less on new cars last year due to the impact of Western sanctions and surging prices. This has been the lowest record for automobile production since the early 1990s, with car makers halting production and selling factories.
Used Car Sales Rise Amidst the Decline
As spending on new passenger cars dropped, sales of used ones rose by 14%, accounting for almost 75% of all cars sold in 2022. The average price of new cars sold in 2022 surged by 17% to 2.33 million rubles ($31,289), while those of used cars climbed by 32% to 890,000 rubles ($11,953), according to the analytical agency Autostat.
The Impact of Sanctions on the Automobile Industry
Russia’s automobile industry, which heavily relies on foreign investment and equipment, has been hit hard by an exodus of international manufacturers due to Western sanctions. American, European, and Japanese car manufacturers have either left the country or suspended deliveries of cars and components, halting their local production indefinitely.
Used Cars Market Held Up Despite Price Increases
“Money flowed into the used-cars market as prices for second-hand cars held up, while at the same time, the structure of the new-cars market changed significantly,” Autostat CEO Sergey Udalov told Reuters. Despite the 32% price increase in used cars, consumers still find it a more viable option, especially with the significant price surge in new cars.
Expected Recovery in the Market
Market analysts predict a fast recovery for the market, expecting sales of new models to climb to around 800,000 this year, from 687,370 last year. Although this is expected, it still remains uncertain if the automobile industry can fully recover as long as Western sanctions continue to weigh in on the industry.