For an automaker to manufacture locally, two elements need to be in effect: for one, the market needs to be large enough to justify it, and for another, importing has to be too expensive to make it worthwhile. Many automakers have found both those elements in place in Russia, but may not for very much longer. According to Ward's, changing conditions in Russia could spell the end of local production in the world's largest country. On the one hand, the market is shrinking, while on the other, import duties are dropping.

The market for new cars in Russia fell by six percent in May when compared to the same period last year, leading analysts to predict a massive drop by 26-30 percent over the course of the year. If the decline continues apace, the market could drop from 3.6 million projected new-car sales in Russia to just 2.3 million by 2018. Meanwhile, Russia's obligations to the World Trade Organization mean that import duties on cars manufactured abroad will have to drop from 25 percent to 15 percent by 2019, making it less expensive to sell imported cars in Russia. At the same time, government incentives for manufacturing locally – whether by local or foreign automakers – may drop in the years ahead thanks to a weak ruble and the spiraling cost of Russia's invasion of the Crimean peninsula, according to the report.

Analysts expect that, as a result, vehicles produced locally by foreign automakers could drop from 52 percent of the current market to 26, while imports rise to 67 percent – the difference presumably being taken up by Russia's own domestic automakers, which have apparently dwindled to a small proportion of the market. Despite the forecast, however, foreign automakers like PSA, Renault and BMW may still find it advantageous – if only for the shipping costs – to manufacture locally for the Russian market. If present conditions continue, however, we can't help but wonder for how long.


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    • 1 Second Ago
  • 12 Comments
      vegasstyleguy
      • 4 Months Ago
      Hopefully Russia will soon reap what it's sown. From The anti LGBTQ policies to murdering journalists to the slaughter of innocent plane passengers to the taking back of the Sudetenland oops Crimea, Russia deserves to implode and hopefully this is one sign of that implosion.
        pwr2lbs
        • 4 Months Ago
        @vegasstyleguy
        Stop believing everything your TV tells you.
      Technoir
      • 4 Months Ago
      Better stay out of this vodka fuelled country of terrorist neanderthals.
      UnderdogSupporter
      • 4 Months Ago
      I wonder what would happen to production if the European Union and US increase their sanctions on Russia?
        Daniel D
        • 4 Months Ago
        @UnderdogSupporter
        US and Euro car companies would lobby respective governments and political parties to drop sanctions. Profit before principal.
      Dart
      • 4 Months Ago
      It's a shame the Russian people must suffer under Putin and his Neo-Soviet ambitions. One reason the market is shrinking is due to a retraction in population. People are tying to get out, and those that stay aren't having kids. Everyone who is pro-Socialist need only look at Russia to see what a bad idea it is.
        superlightv12
        • 4 Months Ago
        @Dart
        How about Norway, Canada, Switzerland, Sweden, Germany....... Find me a job in any of those and I'll move tomorrow.
        bgruia
        • 4 Months Ago
        @Dart
        But Russia is not socialist at all. If anything, it's the worst version of capitalism you could find - the one wrought without democracy. Sweden is a socialist country, if you need a reference point.