Russia’s automotive sector has taken a huge hit in the wake of its war on Ukraine, the subsequent Western sanctions, and voluntary curtailment of operations by Western companies. Between March and July 2022, new vehicle sales plunged 76% on average compared with the same period in 2021, according to data from the Association of European Businesses. It’s a similar picture with vehicle production: passenger car output declined by 85% year-on-year in the March-June period.
“This is in part driven by Western sanctions, which have deprived Russian manufacturers of essential components, and Western carmakers leaving the Russian market after the start of the war in Ukraine,” explains Mario Bikarski, Europe Analyst at the Economist Intelligence Unit (EIU). “At the same time, it’s related to declining overall consumer demand as a result of high inflation and lower incentive spend.”