Russians switch to buying used cars as sanctions dry up new car market

MOSCOW, Russia: Amidst the full effect of Western sanctions imposed after Moscow’s invasion of Ukraine, spending on new cars in Russia fell by more than half in 2022.

The sanctions have hit Russia’s car industry, which is heavily reliant on foreign manufacturers and imported parts, especially hard, causing a decline in production, surging prices and buyers switching to cheaper used models.

In 2022, spending on new cars in Russia dropped by 52 percent to 1.5 trillion roubles ($20.4 billion), while the sales of new cars decline by 58.8 percent.

As Western car companies suspended production and sold their factories in Russia, overall production fell to its lowest since the collapse of the Soviet Union in 1991.

Data from analytical agency Autostat showed that despite a 14 percent increase in spending on used cars, overall spending on new and used cars dropped over 15 percent in 2022 amid rising inflation that pushed up prices and dragged down living standards.

Used cars, therefore, accounted for almost three quarters of all cars sold, up from 55 percent in 2021, the data showed.

In an interview with Reuters, Autostat CEO Sergei Udalov said, "Money flowed into the used cars market as prices for second-hand cars held up, while at the same time the structure of the new cars market changed significantly."

"Budget Ladas and Chinese cars with prices of 2 million roubles and more remain in it, while premium brands have almost completely left," he added, according to Reuters.

According to the Rosstat statistics agency, annual inflation in 2022 was 11.9 percent, which contributed to an estimated 1 percent decline in the real disposable incomes of Russians.

The average price of new cars sold last year increased by 17 percent to 2.33 million roubles, and used autos by 32 percent to 890,000 roubles, it added.