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OEMs adjust strategies as Russia-Ukraine war continues

Until recent events, Russia was one of the leading automotive producers worldwide. According to Statista, nearly 1.4 million vehicles were nationally produced in 2021. The production volume decreased sharply in March 2022 and reached its lowest level at less than 4,000 vehicles by May 2022. In a side-by-side comparison of March 2021 to March 2022, production dropped 72.1%.

Meanwhile, drivers are holding back on purchasing. Passenger vehicle sales in Russia fell 65.7% to 386,000 units by December 2022, as reported by the Russia Federal State Statistics Service.

Among the reasons for these deficits are the sanctions in response to the war in Ukraine. The EU, the US, the UK, and Japan banned the export of cars into Russia in March 2022. In retaliation, the Russian government banned exports of passenger cars to 48 Western countries until the end of 2022—those that Russia claims have been “unfriendly”. The Russian Economy Minister added that the ban was aimed at “ensuring the continued functioning of key sectors of the economy.”

“This war severely disrupted the automotive value chain and prompted OEMs and suppliers to defer or discontinue trade with Russia,” says Irina Tsukerman, Human Rights and National Security Lawyer and Geopolitical expert.

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