Russian Auto Sales Surge Yet Threatened by Rising Costs

Russia’s auto market experienced an unexpected surge in new car sales during October, raising hopes for a recovery. However, analysts caution that this uptick may be short-lived. Consumers scrambled to finalize purchases ahead of significant tax increases, setting the stage for another downturn in early 2026.

Once a leading player in Europe, the Russian automotive sector has encountered considerable challenges following the 2022 invasion of Ukraine. Exiting Western brands, soaring interest rates, and a cooling economy have curtailed consumers’ capacity to invest in major purchases like vehicles.

The October sales jump can be attributed to impending scrappage fee hikes. Set to begin December 1, these fees will increase drastically for powerful imported vehicles, with a further 10% rise across all cars starting January 1. This measure, aimed at bolstering local brands, places domestic manufacturers like Avtovaz in a favorable position against imports.

In October, unit sales soared by 35% compared to September, reaching 165,702, though still remaining 3.2% lower than the previous year. The average price for a new car soared to an all-time high of 3.43 million roubles ($42,189), reflecting the impact of new fees and inflationary trends.

Chinese automakers have significantly benefited, with nearly 1 million units sold in 2024, while total sales are anticipated to reach approximately 1.3 million—far from the pre-war projection of 4 million. The initial months of 2026 may reveal weaker market demand, as buyers who expedited their purchases in October may find themselves already equipped.

Further complications lie ahead, including a planned increase in the value-added tax from 20% to 22% next year, which could push vehicle prices even higher, adding to the strain on discerning consumers.

Many prospective buyers are opting to purchase now at elevated prices to avoid future increases. One luxury car buyer remarked, “Had I waited, I would have faced a price of 7.2 million roubles instead of 6.5 million,” illustrating how anticipated price changes are influencing consumer decisions.

The Russian auto industry is navigating a complex landscape of systemic challenges coupled with policy-induced price hikes, with temporary sales boosts veiling a more profound, ongoing crisis in vehicle affordability and sales.