President Vladimir Putin addressed a forum dedicated to boosting the automotive sector, outlining Russia’s aim to set leading technical benchmarks in vehicle manufacturing. He stressed that not every production step needs to stay in Russia, but core elements such as engineering, intellectual property rights, and know-how should be Russian. He highlighted this as a key principle supported by a Russian news service.
Putin called for stable factory operations and strong protections for workers. He warned about partners who suspend or end cooperation with Russia and noted that global car production depends on cross-border collaboration and intricate supply chains. He pointed out that many contract manufacturers and suppliers for car plants operate overseas.
“A sizable portion of these links has been cut today for well-known reasons. Partners of Russian car plants have halted deliveries or signaled withdrawal from our market even after long commitments. It is clear this will affect output, and the impact is already visible,” the president stated.
He highlighted weaker indicators this year compared with the previous period:
In March, domestic car production stood at roughly one third of the prior year, and in April it declined further to about one fifth. The market for commercial vehicles faced notable stress, with potential demand shortages. Principal buyers—businesses and shipping firms—were slow to invest, contributing to pressure on capacity and pricing.
Putin emphasized that the foundation for automotive growth rests on delivering high-quality, affordable vehicles for Russians. He urged a strategic, forward-looking approach that goes beyond solving current hurdles and includes long-term plans for technological and production shifts aligned with citizen needs for reasonable cars and a robust economy. He noted this should extend to automotive equipment for urban, road, construction, and municipal use.
Shaping a future for Lada
At SPIEF on 16 June, Finance Minister Anton Siluanov argued that the state should absorb risks in selling goods and ensure demand, even by reassigning state workers toward native Lada production. He stressed a focus on domestic capabilities and friendly partners, particularly in electronics and digital developments, while the government accepts some business risk to maintain stability.
“The state will procure airbags for Lada. It will back the operation of the business so this industry remains viable and has a future,” Siluanov pledged. Yet he warned that state aid must not become an endless loop; otherwise inflation could accelerate and living standards could suffer.
Following Siluanov’s call, AvtoVAZ committed to supplying vehicles to authorities to replace imports blocked by sanctions. “We are ready if such a decision is issued,” stated AvtoVAZ’s spokesperson Sergey Ilyinsky to socialbites.ca.
Recent weeks saw AvtoVAZ restart production of the Lada Grant, albeit without ABS and airbags, a move aimed at maximizing localization amid component shortages. The new model was priced at about 658,300 rubles, reflecting a broader push to adapt to constrained supply chains.
Industrial output under strain
A June meeting on economic matters acknowledged a drop in industrial output, including the vehicle sector, with April data showing weakness. Several foreign automakers such as Toyota, BMW, Nissan, Stellantis, Lexus, Volvo, and Daimler Truck paused car production and deliveries due to sanctions and disrupted supply chains. A number of foreign brands exited the market, while domestic producers faced production halts as well.
According to the Association of European Businesses, May 2022 saw a steep decline in new passenger car and light commercial vehicle sales in Russia, with a year-over-year drop of about 83.5 percent, totaling roughly 24,268 units sold that month.