Waiting for Renault After rebounding in 2024, Russia’s new car market sees yet another wartime plunge
In 2022, when Moscow launched its full-scale invasion of Ukraine, new car sales in Russia plunged, falling more than 50 percent. Over the following two years, the market rebounded, and by 2024, sales had nearly returned to 2021 levels. But in 2025, the trend has reversed again: between January and May, Russians bought 26 percent fewer cars than during the same period last year. The independent outlet iStories recently dug into what’s driving the decline. Meduza has translated their report.
High interest rates
In the last few years, about half of all new cars in Russia have been purchased with loans — with the notable exception of 2022, when the full-scale war in Ukraine began.
Between January and May 2025, the volume of car loans issued in Russia dropped by nearly 50 percent, totaling just 500 billion rubles ($6.3 billion). The decline actually began in late 2024, triggered by rising interest rates that deterred many potential buyers. According to analysts from Frank RG, the average interest rate on new car loans hovered around 14 percent in July–August 2024, but rose to 16.7 percent by the end of the year.
Car loans became more expensive after the Central Bank increased its key rate (the interest rate at which it lends money to commercial banks). The current key rate is 20 percent. While banks have managed to keep car loan rates below this level thanks to subsidies from automakers, state support programs, and other measures, borrowing remains expensive.
Another factor is the Central Bank’s move in July 2024 to tighten lending rules for high-risk borrowers — individuals already spending more than 50 percent of their income servicing debt. “This measure became the main factor cooling the [auto loan] market and excluded up to 40 percent of potential borrowers at some banks in the first quarter,” Frank RG analysts noted.
That said, loan rates began to ease in 2025. By May, Frank RG reported an average rate of 13.2 percent, while the United Credit Bureau put it at 17 percent — a drop of 4.4 percentage points in just five months.
The car recycling fee doubles
Russia’s car recycling fee is a charge meant to cover the government’s cost of disposing of old vehicles. For individuals importing a car for personal use, the fee is nominal — just 3,400 rubles ($43) — provided the engine is no larger than three liters and the car isn’t resold to someone else within a year.
For importers and manufacturers, however, the fee can run into hundreds of thousands or even millions of rubles per vehicle — a cost typically passed on to consumers.
On October 1, 2024, the recycling fee rose by 70–85 percent, depending on engine size. It increased again on January 1, 2025, by another 10–20 percent — and similar hikes are now expected annually.
While importers have to pay the full amount, the government has pledged to reimburse manufacturers. The goal is to support domestic production and encourage foreign brands — especially Chinese ones — to localize assembly in Russia. But it’s not that simple, according to Avtostat analyst Igor Morzheretto. “Russian manufacturers also pay the recycling fee,” he told Kommersant. “They’re reimbursed based on their level of localization, but not immediately. That money disappears from their budget for a while, and they have to cover the gap.”
Because the fee hikes were announced in advance, many buyers rushed to purchase cars in late 2024, anticipating price increases. This surge in demand contributed to the slump in early 2025.
Hoping foreign brands will return
The sharp decline in new auto sales in Russia came as a surprise even to industry insiders.
“No experts expected sales to fall more than 10–15 percent. For anything beyond that, we can thank the ‘waiters,’” said Avtostat head Sergey Tselikov in March, using his term for consumers who have delayed buying in hopes that familiar car brands would return. Reports out of Germany and South Korea have fed speculation about such comebacks.
Even if those brands do return, analysts say it could take months or even years. According to the car magazine Za Rulem, South Korean and some Japanese brands could resume sales within six months, since they kept their dealership networks intact despite suspending new car sales. Western automakers, by contrast, may need at least three years to reestablish operations, according to analysts at Rolf.
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Sales are down — but what about prices?
Despite the buying rush ahead of the recycling fee hike, new car prices rose only modestly overall. According to Avtostat, the average weighted price of a new car in Russia increased just six percent in 2024, reaching 3.12 million rubles ($39,000). Auto.ru reported that the average price barely changed at all.
Prices began falling in March 2025, especially for Chinese cars. Discounts ranged from 300,000 to 500,000 rubles ($3,750–$6,260), with some models marked down by as much as one million rubles ($12,500). Dealers were then forced to cut prices due to oversupply, since too many vehicles were imported before the tax hike. “Each car sitting in the showroom loses at least 2.5 percent of its value per month. And profit margins are only 5–6 percent,” the Rolf dealership group explained in March. “After just two months in storage, the profit’s gone.” As of May, inventories remained high.
Another reason for the deep discounts is the strengthening ruble, especially against the yuan, which made imported Chinese cars cheaper. Many dealers are using anticipated future profits to fund aggressive price cuts now.
Sellers of Russian-made cars also began offering discounts in March, typically between 150,000 and 350,000 rubles ($1,880–$4,380). On June 6, AvtoVAZ announced markdowns on all Lada models through the end of the month. But according to a Lada dealer, even with the discounts, Chinese brands often offer more appealing and affordable options. “A modern Chinese car packed with electronics — even a basic crossover — can cost the same as a Lada Vesta,” noted Igor Morzheretto.
Dealers are expected to clear out overstocked inventory by summer, after which prices will inevitably rise, experts say. Discounts may disappear entirely or remain available only on select models. Analysts surveyed by Autonews expect car prices to increase by 3–15 percent over the summer.
