Russian auto industry struggles with high interest rates, Chinese competition, sanctions

ISTANBUL/MOSCOW

Russia’s car and truck industry is facing a crisis as high interest rates, sweeping Western sanctions and growing competition from Chinese manufacturers have reshaped the market.

Brands like Toyota, BMW, Skoda and Audi dominated sales in Russia before the war in Ukraine. Now, Chinese brands such as Chery, Geely and Voyah have taken their place, pushing imports and sales into decline.

According to data compiled from Russia’s Industry and Trade Ministry and local analytics agency Avtostat, new car sales fell 26% in the first seven months of 2025 to 742,000 units.

Imports in the first half dropped 63% to 149,300 vehicles, with China accounting for 77% of the total, followed by Kyrgyzstan at 8% and Belarus with 4.7%.

Western automakers, once market leaders, exited after Russia’s February 2022 invasion of Ukraine.

Renault handed over its Avtovaz stake and Moscow plant to the state for one ruble, with the site now producing Moskvich cars. Nissan transferred its assets, including a St. Petersburg factory, to the state, which now produces Lada models.

Mercedes, Volkswagen and Toyota also halted production, with some facilities eyed for joint ventures with Chinese firms.

With Western brands gone, Chinese companies quickly filled the gap. In June, Lada led sales, followed by Chinese brands Haval, Chery, Changan, Geely, Jetour and GAC.

But oversupply has emerged, forcing 360 Chinese car dealerships to close in the first half of the year, according to Gazprombank.

Reports suggest up to 10 Chinese brands may leave the Russian market in 2025.

Russia’s biggest domestic producers, Avtovaz and Kamaz, have cut working days at some plants due to weak demand and a foreign parts glut.

The government has banned sales of Chinese-made trucks from brands like Dongfeng, Foton, Faw and Sitrak, though no such restrictions are yet planned for Chinese passenger cars.​​​​​​​