Surge in New Car Sales in Russia Amid Recycling Fee Changes
In September 2024, Russia witnessed a remarkable surge in new car sales, with approximately 150.9 thousand passenger cars sold, marking a 37% increase compared to the same month in 2023. This figure not only sets a three-year record for monthly sales but also highlights a significant recovery in the Russian automotive market, which had struggled since the onset of Western sanctions in 2022. According to the analytical agency Avtostat, this is the highest monthly sales figure since April 2021, when sales peaked at 171.5 thousand units.
The increase in demand is largely attributed to the impending rise in the recycling fee, which has prompted consumers to purchase vehicles before prices increase. Azat Timerkhanov, head of Avtostat's press service, noted that the new recycling fee, which increased by 70-85% starting October 1, 2024, has created a sense of urgency among buyers. The fee is expected to rise annually by 10-20% until 2030, aimed at stimulating local car production in Russia. The Ministry of Industry and Trade has assured that these changes should not drastically affect the cost of Russian-made cars, although prices for many models are anticipated to increase in the near future.
Market Dynamics and Future Projections
The car sales boom can also be linked to deferred demand following a shortage of new cars in 2022 and 2023 due to the exit of many foreign brands. As new vehicles, particularly from Chinese manufacturers, have started to fill the market, consumers are finally making purchases that they had postponed. From January to August 2024, car loans issued in Russia reached nearly 1.6 trillion rubles, doubling compared to the same period in 2023, as consumers take advantage of promotional offers before interest rates rise further.
Experts predict that average interest rates for new car loans may range between 18-20%, while used car loans could see rates soaring up to 40%. Despite these challenges, the Russian car market is projected to sell between 1.45 million to 1.6 million cars in 2024, potentially returning to pre-sanction levels. Lada continues to dominate the market, with other Chinese brands rapidly gaining ground, now accounting for approximately 60% of sales. As the market adapts to these changes, it remains to be seen how the evolving landscape will shape the future of car ownership in Russia.
