(Reuters) – Domestically-produced cars now account for less than 40% of Russia’s car market, Deputy Industry and Trade Minister Albert Karimov said on Friday, down from 70-75% before Russia despatched troops to Ukraine in February 2022.
Russia’s auto industry had been heavily reliant on investment, equipment and parts from overseas and was hit hard by the fallout from Western sanctions, with sales of new cars plunging by 59% last year and Western automakers abandoning the market.
Karimov, speaking at an economic forum in St Petersburg, said demand was recovering towards pre-conflict levels. But options are narrowing for Russian consumers, who are having to get used to higher prices and Chinese brands, such as Haval, Chery and Geely. Chinese cars now account for more than 40% of sales.
The number of registrations of new and newly imported used cars grew to 588,000 in January-May from 446,000 in the same period last year, said Karimov.
“On the whole there has been substitution through imports, through imports of used cars, but in terms of purchasing power, the market is returning … to the levels we had before,” said Karimov.
But while demand and sales are recovering, production is lagging. Factories across Russia collectively produced just 450,000 cars last year, the industry’s worst showing since the collapse of the Soviet Union.
Karimov said Russia currently has capacity to produce more than 2.7 million passenger cars a year, and that fostering more production was central to the government’s strategy.
“It is that we should increase supply and our car industry should work at full capacity,” Karimov said. “We must reach (a share of Russian-made cars) at least 60% in the passenger car market in 2025 and continue to increase it.”
(Reporting by Gleb Stolyaroy; Editing by Alexander Marrow and David Evans)
