Russia’s Automotive Sector Collapses Again In May, Down Another -28%
Russia’s automotive industry continues its spiral, with passenger car and light commercial vehicle sales plummeting another -27.5% year-on-year in May 2025, totaling only 98,300 units. This decline continues the downward trend observed in April, where sales dropped by 26%.
The Ministry of Industry and Trade attributed the May slump to seasonal factors. However, auto dealers contest this explanation, noting that May typically sees a boost in demand.
With the spring season traditionally a high point for sales, the manager at a dealership representing multiple Chinese brands remarked,
“The situation is significantly worse than April, and worse than last year. We didn’t expect it to be this bad.”
Economic uncertainty is a significant factor affecting consumer behavior. Potential buyers are reportedly holding onto their savings or converting them into U.S. dollars, anticipating a ruble depreciation. One dealer noted that large and unprofitable discounts are currently the only reliable incentive to close a sale.
The market is also seeing a reliance on older inventory. Sergei Tselikov, director of the AvtoStat analytics agency, highlighted that in May, a significant portion of sales for some Chinese automakers were from 2023 stock, not 2024 models. For instance, 63% of FAW’s sales and 86% of Livan’s were vehicles manufactured more than a year ago.
Tselikov commented, “Too bad cars aren’t like wine — age doesn’t increase the value.”
Domestically produced vehicles have fared slightly better, with 57,600 Russian-made passenger cars sold in May, down -15% from a year earlier. Despite this, the Central Bank reports that capacity utilization in the automotive sector, adjusted for seasonal fluctuations, has fallen to its lowest level since early 2023.
Analysts predict that 2025 could be one of the most challenging years for Russia’s car market, with sales potentially dropping to around 1.2 million vehicles, a -20% decline from the previous year. This downturn reflects broader economic challenges, including inflation, high loan rates, and reduced consumer purchasing power.
