“The auto industry seems to have become a leading indicator of the Russian economy, as it reacted most quickly to changing economic conditions,” Finnum economist Olga Belenskaya said.
Still, “there is no certainty that the economy has already hit bottom. It will probably be next year.”
The Russian car market, which once rivaled the sales figures of Europe’s largest economy, survived, but shrunk and changed.
Sanctions by countries that accounted for about half of Russia’s foreign trade before the war have cut manufacturers off some technologies and are struggling to cope with supply chain disruptions.
Isolation is one of the factors that distorted Russia’s wartime economy and pushed it towards what the central bank calls “de-industrialization.”
Bloomberg Economics expects GDP to contract by 3% next year as oil production and exports are squeezed, even though the recession has been shallower than originally expected.
The auto industry’s woes reveal some of the ways Russia is adapting.
According to the Russian Association of Automobile Dealers, only 14 out of 60 brands remain active in a market where automakers such as Toyota once competed with Russia’s AvtoVAZ for supremacy.
Three of them are Russian and the rest are Chinese.
Chinese cars now account for more than 30% of market sales, with the share more than tripling at the beginning of the year, with auto dealer groups expecting it to reach around 40% by 2023.
According to the association, if domestic production stagnate, Chinese automakers could ultimately account for 70% of total sales.
A plant in the Russian enclave of Kaliningrad, which BMW has operated with local partner Avtotor for more than 20 years, has already started test production for the Chinese brand, and Nissan’s old plant in St. Petersburg could soon follow. There is a nature.
AvtoVAZ, a maker of Lada cars dating back to the Soviet era, is also jumping at the opportunity to increase its market share.