People examine a retro Mercedes car parked near the Gorky Park in Moscow in April 2023.
- Car sales in Russia are hovering near a quarter of what they were before the war in Ukraine.
- Soaring prices, deteriorating consumer sentiment, and lack of supply has crushed Russia’s auto market, per Yale data.
- In the months after the invasion, purchases of foreign-made cars in Russia neared a standstill.
Russia’s economy isn’t doing as well as Moscow’s official data suggests. One peek under the hood tells you all you need to know.
Russia’s car industry — one of the country’s most important sectors — has seen a total collapse, according to Yale School of Management data shared with Insider. Plummeting car sales and a dramatic swing in the type of cars locals now purchase point to broader economic woes and a downward spiral with no end in sight.
Before the invasion, about 100,000 automobiles were sold every month across Russia. But thanks to a combination of soaring prices, deteriorating consumer sentiment, and a lack of supply, sales are hovering at about one quarter of pre-war levels, Yale researchers Jeffrey Sonnenfeld and Steven Tian told Insider on a call Thursday.
“Russians are just buying less cars, period,” Tian said. “That speaks to the weakness of the consumer in Russia. This is as close to a proxy to deteriorating consumer sentiment as there is, and the story it tells is profoundly distressing. Russians just aren’t spending money.”
Dig a little further, too, and you can see that foreign automobile sales in particular paint a bleak picture.
Historically, Russians have preferred to drive foreign-made vehicles, for both the prestige and higher quality. Yet, in the months after the invasion, Yale data shows that the purchase of non-Russian-made cars has come to almost a complete standstill.
Dozens of Western names pulled out of Russia in 2022, which left locals mostly with cheaper, lower quality alternatives. By January 2023, Honda, Hyundai, Lexus, Mazda, and others saw more than 90% declines in year-over-year car sales in Russia.
The only foreign brand that saw an increase in sales, according to Sonnenfeld, was Chinese automaker Geely, which saw a stark 88% year-over-year increase in sales.
Now, Russians have had to turn to the local brand Lada for their cars, a company with a reputation for mechanical issues and suspect quality.
“You’ll never meet anyone outside of Russia who’s buying a Lada,” Sonnenfeld said. “No one drives them out of style, safety, or quality.”
Lada now accounts more than half of all car sales in Russia, while China’s Geely commands an 11% market share.
“It’s not only that sales have plummeted, but it’s that sales of foreign brands were just so high before the war,” Tian added. “If you go around Moscow and St. Petersburg, you find that elite Russians only drive the car brands we recognize, like Porsche, Jaguar, Hyundai, and so forth. The only Russians driving Ladas were those with less disposable income.”
