Putin calls for price controls as Russian car sales slump to record low

MOSCOW (Reuters) – President Vladimir Putin on Wednesday urged the Russian government to control car prices, as an industry official said Western sanctions could push annual sales below a million for the first time since records began.

Auto sales have fallen more than 60% so far this year and could end up being less than a quarter of what they were a decade ago, according to Maxim Sokolov, head of Russia’s top automaker Avtovaz.

Part of this year’s decline is due to the withdrawal of foreign automakers such as Renault and Mercedes-Benz and a collapse in demand due to mass mobilization for the conflict in Ukraine.

But much of it is also due to falling living standards and rising prices, as well as the difficulty of obtaining foreign-made components after countries imposed a barrage of sanctions. Westerners in response to the Russian military campaign in Ukraine; the last Lada model had to be produced without airbags or anti-lock brakes.

Speaking to senior officials, Putin acknowledged the situation was “not easy” and asked the government to consider making cars more affordable, suggesting prices were being raised unfairly.

“I would like to draw your attention to the need for permanent control of pricing, so that in these difficulties, of which we are all aware, including logistics, no one abuses or unreasonably increases the prices of road vehicles”, did he declare.

“I hope you and the Federal Antimonopoly Service do this all the time.”

“THE MOST DIFFICULT SITUATION”

Trade Minister Denis Manturov told Putin that assembly lines were being ramped up at Russian automakers, including Avtovaz, maker of the Lada and Renault subsidiary until May, GAZ, Kamaz and UAZ.

Painting a rosy picture, he said production of the Moskvich (“Muscovite”), a Soviet-era brand that fell into oblivion after the fall of the Soviet Union, would resume by the end of the month, in a factory taken over from Renault. .

He also noted, however, that the market had been supported by loans and subsidies for manufacturers, and said 55,000 vehicles had been sold with government support this year.

Manturov also offered to extend preferential auto financing to military personnel, adding, “Today we can speak of an emerging trend towards an industry recovery.”

Sokolov was significantly less optimistic.

He said the number of cars sold in Russia would fall below 1 million this year, a first in modern history.

“Last year it was just over 1.6 (million); God willing, this year it will be 670,000-700,000,” he told the annual Transport Week conference.

This compares to sales of around 3 million units a year as recently as 2012 – before a fall induced in part by a previous wave of sanctions in 2014, after Russia unilaterally annexed Crimea to the Ukraine.

“Indeed, Avtovaz, as well as the entire automotive industry of the Russian Federation, found itself in probably the most difficult situation this year,” Sokolov said.

“We have never faced such a vast and comprehensive challenge.”

(Reporting by Caleb Davis and Gleb Stolyarov; Editing by Kevin Liffey)

Copyright 2022 Thomson Reuters.

James V. Hayes