08 September 2022

Russian Car Market New Direction

The Russian car market is protected by import duty so brands with any volume of note had assembly plants. Sanctions came and foreign producers decided to pull out. Lada was owned so by Renault so that was an uncertain situation too. 

Renault gave away its ownership, leaving the national car maker to find its own way. With Lada, some Chinese assembly and a few local light commercial companies, it didn't look too flash. Of course, there are plenty of cars for Russians to drive around in so it wasn't a big deal for now but in time an issue of growing concern.

A quick overview of domestic registrations shows August '22 they were -62% and -64 YTD so were understandably well down and August was par for the YTD figure. Where can new stock be obtained? 

After a pause, Lada first started production of the Granta but without ABS, airbags, belt tensioners or an immobilizer. It now features two front airbags so that's an improvement. Shortly thereafter, the Niva Legend also recommenced but the Vesta, Largus and X-Ray are not being made and Lada has had problems bringing them back into production. 

The other source to tap into is China, not large suppliers of cars at present with import duty on anything imported impacting on the price unless large scale assembly is embarked on. Currency fluctuations and reputations affected by dealing with Russia will also be issues to consider. 

Below are sales for August and already we can see Lada and Chinese brands taking over as others sell off existing stock. All the brands doing best are local and Chinese (yellow shading). Lada's sales increased 75% on July while market share has gone up from 18% to 43% compared to August '21. However, with sales well down, volume was actually down too, albeit only to a slight degree. 

Data source: AEB.