Over the period from March to December, Russian automobile production has been divided by 4 between 2021 and 2022. A decline linked to the withdrawal of many manufacturers from the country, Renault in the lead, since the start of the war in Ukraine.
From a high-potential market to a dormant market. Following the outbreak of war in Ukraine on February 24, 2022, Russia saw its automotive industry collapse. In the context of international sanctions and calls for a boycott of companies that would continue their local activity, many groups had indeed quickly announced their withdrawal in the first months of the conflict, Renault and Stellantis in particular.
A production divided by four
“The war in Ukraine had many implications for the Russian automotive industry. Direct consequences with the exit from this market of a very large number of foreign manufacturers, but also indirect, with difficulties in supplying various components” , summarizes Alexandre Marian, consultant at Alixpartners.
Some figures provided by the firm Inovev allow us to understand the extent of the phenomenon. Russian automobile production has thus fallen from 1.57 million units assembled in 2021, to only 600,000 last year, a drop of 61%.
The effect is even more noticeable when focusing on March to December, with production completely dropping off from the start of the conflict. Over this period, production was divided by four.
The Renault factories, in Moscow and Togliatti, have in fact gone from a monthly production of several thousand units to 0 from the first months of the war in Ukraine, as revealed by Inovev data.
A collapse that is also found in sales, which fell from just over 1.66 million units in 2021 to 687,000 units in 2022. The drop in automotive production could not really be compensated for by imports.
“Before the war in Ukraine, Russia was not really a car importing country, with significant local production”, underlines Alexandre Marian.
Industrial changes that will take several years
However, the Russian authorities have sought to facilitate the resumption of production, even going so far as to lower the prerequisites in terms of safety standards:
“Faced with the lack of components, derogations from the Russian government have made it possible to produce vehicles with less safety equipment. But, in a car, there are between 3000 and 7000 components, some of which are essential and it remains difficult to find new suppliers. And the available components could also be allocated to other priority sectors”, explains Alexandre Marian.
More generally, some observers expected to see foreign manufacturers who deserted the country of Vladimir Putin replaced by Chinese brands. But that doesn’t show up in Inovev’s production data. Imports from China don’t appear to have jumped over the period.
“For such changes, an industrial establishment or even changes in export flows, it takes longer, between 3 and 7 years. It is estimated that the return to 60%-70% of Russian automobile production by before the war will take several years,” said Alexandre Marian.
