As Russia wages conflict, automotive gross sales plummet and Putin seeks a repair

MOSCOW — President Vladimir Putin urged the Russian authorities on Wednesday to manage automotive costs, as one business head mentioned Western sanctions might ship annual gross sales crashing to under 1 million for the primary time since information started.

Auto gross sales have fallen over 60% to this point this yr, and will find yourself being lower than 1 / 4 of what they have been a decade in the past, in line with Maxim Sokolov, head of Russia’s prime carmaker Avtovaz.

A few of this yr’s drop is as a result of pullout of overseas carmakers similar to Renault and Mercedes-Benz and a collapse in demand because of a mass mobilization for the Ukraine battle.

However a lot can be because of falling residing requirements and better costs, in addition to the issue of securing foreign-made elements after the imposition of a barrage of sanctions by Western international locations in response to Russia’s army marketing campaign in Ukraine; the newest Lada mannequin has needed to be produced with out airbags or anti-lock brakes.

Talking with prime officers, Putin acknowledged that the state of affairs was “not straightforward,” and requested the federal government to have a look at making vehicles extra reasonably priced, suggesting that costs have been being raised unfairly.

“I wish to draw your consideration to the necessity for fixed management over pricing, in order that underneath these difficulties, of which we’re all conscious, together with logistics, nobody abuses or unreasonably raises the costs of highway automobiles,” he mentioned.

“I hope that each you and the Federal Antimonopoly Service are doing this on a regular basis.”

‘Probably the most troublesome state of affairs’

Commerce Minister Denis Manturov instructed Putin that meeting traces have been being ramped up at Russia’s home carmakers — together with Avtovaz, maker of the Lada and a Renault subsidiary till Could, GAZ, Kamaz and UAZ.

Portray a rosy image, he mentioned manufacturing of the Moskvich (“Muscovite”), a Soviet-era model that fell into obscurity after the autumn of the Soviet Union – would resume by the top of the month, in a plant taken over from Renault.

He additionally famous, nevertheless, that the market had been supported by loans and subsidies for producers, and mentioned 55,000 automobiles had been offered with authorities assist this yr.

Manturov additionally proposed extending preferential automotive financing to army personnel, including: “At present we will communicate of an rising pattern in direction of a restoration of the business.”

Sokolov was markedly much less optimistic.

He mentioned the variety of vehicles offered in Russia would this yr fall under 1 million, a primary in fashionable historical past.

“Final yr it was just a little over 1.6 (million); God keen, this yr will probably be 670,000-700,000,” he mentioned on the annual Transport Week convention.

This compares to gross sales of round 3 million items a yr as lately as 2012 – earlier than a plunge induced partially by a earlier wave of sanctions in 2014, after Russia unilaterally annexed Crimea from Ukraine.

“Certainly, Avtovaz, in addition to the complete automotive business of the Russian Federation, has most likely discovered itself in essentially the most troublesome state of affairs this yr,” Sokolov mentioned.

“Now we have by no means earlier than confronted such a large-scale and complete problem.”