Russian auto industry imploding

RUSSIA / FSU POLITICS - In Brief 01 Jul 2022 by Alex Teddy

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In May 2022 car production was down 97% YoY. That is according to the Russian statistical agency. Auto manufacturing declined at the beginning of the war but it has taken several months for the impact of sanctions to be felt. Sanctions means that Russia cannot access vital components. Moreover, as the economy has been hit, Russians have less money to spend on vehicles. Truck and bus production were down 40% and 6.5% YoY in May 2022. This is nothing as bad as for cars. That is because cars are a consumer item. People can make their family car last a year or two longer.  300 000 people work in the Russian auto industry and a further 3 million are employed in ancillary fields. Russia supplies many of the vehicles bought in other former USSR nations. 18 out of Russia's 20 car factories have stopped production. Lada is the country's most popular vehicles. Sales were down 84% in May 2022. The government said prices for vehicles are up 30%. That is due to inflation and the increased cost of parts. Putin has called for a new scheme to replace foreign parts. Michelin said on June 28 that it was moving out of Russia. Its factories will be taken over. The French company said it faced supply chain difficulties. The move will take effect by the end of 2022. Michelin is a French company. Some were angry that Michelin did not withdraw sooner.