Around 60% of Russia’s car dealers now face bankruptcy if government fails to step in with large scale bailouts of the industry, according to the head of the Russian Automobile Dealers Association (ROAD) Alexei Podshchekoldin. “Some will last another two or three months, someone will last up to six months. Already in March-April, we will see the bankruptcy of dealers – both large and small. The situation on the market spares no one,” said the president of the Russian Automobile Dealers Association (ROAD) Alexei Podshchekoldin.
A rapidly slowing economy and crushing interest rates are cited as the primary drivers of the current unsold inventory level of 700,000 automobiles gathering dust across Russia’s roughly 4000 car dealerships, a level not seen since the depths of the 2020 COVID crisis. At the beginning of 2025, about 700 thousand cars have already accumulated in the warehouses of Russian distributors. This is almost twice as high as the level of the beginning of 2024 of about 400 thousand cars. In the current stocks, more than half (about 52%) are cars made in Russia, the rest are imported, mainly from China.
“On average, a dealer sells about 100 cars per month, and it is necessary to keep stock in warehouses – say, 200 cars. The average cost of a new car today is 3.5 million rubles, that is, a dealer needs 700 million rubles to buy these cars. And this is in addition to the costs of spare parts, consumables and other expenses. Most dealers use loans, and with a margin of 1.5-2%, the profitability is eaten up by a greatly increased rate,” Podshchekoldin explained.
Historically a low margin business model, car dealerships have been hit hardest in Russia’s recent high-interest environment, with the Russian Central Bank’s latest rise to 21% hitting the wider consumer durable goods economy the hardest. As of 2019, there was a total of 600,000 employed with automobile dealers across the country, 1% of Russia’s total workforce, and with the downstream supply chain no longer needed, the collateral damage to the economy is expected to expand heavily into job losses within the manufacturing sector. There is no longer any segment of the russian economy immune to the unfolding collapse.