Russias Car Market Faces Major Decline: Sales Predicted to Drop by 25% in 2025, Says AvtoVAZ CEO

Sales of passenger vehicles in Russia may decline by as much as 25% this year, according to Maxim Sokolov, the CEO of AvtoVAZ, the country’s leading automobile manufacturer. In an interview with the state broadcaster Rossia 24, he stated, “It’s evident that the market is set to shrink, and we anticipate this decrease to be approximately a quarter when compared to last year. We estimate that passenger car sales will reach around 1.1 million, or perhaps 1.2 million if light commercial vehicles are included.”

In contrast, 1.55 million passenger cars were sold in Russia last year, representing a significant 47% increase from the previous year. Initially, analysts had predicted a much softer decline of 10% for 2025, attributing it to inflationary pressures and higher scrappage fees.

Dealers report that macroeconomic instability is contributing to weakened demand, as potential buyers are opting to save their money or convert their holdings into U.S. dollars, anticipating a depreciation of the ruble that many economists expect.

As per the AvtoStat analytics agency, inventories of passenger vehicles have surged to over 500,000 units.

To entice buyers, dealerships across Russia are increasingly resorting to deep discounts, which, as noted by Sergei Tselikov, the head of AvtoStat, could “undermine” the car sales industry.

Additionally, the challenges for Russia’s automotive sector have been aggravated by a nearly threefold decline in electric vehicle sales in the first five months of 2025, as reported by the Vedomosti business newspaper.

Since the invasion of Ukraine in 2022, the Russian car market has been drastically altered due to the exit of Western manufacturers and a significant increase in imports from Chinese companies.