President Vladimir Putin, speaking at a meeting focused on advancing the automotive sector, underscored Russia’s aim to lead in the key technical benchmarks of vehicle production.
“Naturally, this does not mean every manufacturing step must occur inside Russia, but core, critical areas such as engineering, intellectual property rights, and know-how should be Russian,” he noted, as quoted by a Russian news service.
Putin also called for stable operations at factories and protection of workers’ interests. He highlighted the risk posed by partners who suspend or withdraw cooperation with Russia, stressing that the global practice in car manufacturing relies on collaboration and cross-border supply chains. He noted that many contractors and suppliers for car plants are still abroad.
“A substantial portion of these connections has been cut today for well-known reasons. Partners of Russian car plants have halted deliveries or signaled withdrawals from our market despite long‑standing commitments. It is clear this will impact output, and the effect is already visible,” the president said.
He pointed to deteriorating indicators this year compared with last year:
In March, domestic car production was about one third of the prior year, and in April magnitude fell further to roughly one fifth. The market for commercial vehicles faced significant stress, with a potential shortage in demand. Principal buyers—businesses and shipping firms—were not ready to invest.
Putin emphasized that the foundation for automotive growth rests on high-quality, affordable vehicles for Russians, and called for a strategic, forward-looking approach to development. “We must not only address current challenges in the auto industry,” he said, “but also craft long-term strategies for technological and production shifts that meet citizen needs for reasonable cars and support the economy. This includes automotive equipment for urban, road, construction, and municipal use.”
Shifting authorities toward Lada
At SPIEF on 16 June, Finance Minister Anton Siluanov argued that the state should shoulder risks in selling goods and ensure demand, even by redistributing state workers toward native Lada production. He stressed focusing on domestic capabilities and friendly partners, especially in electronics and digital developments, while the government assumes some business risk for 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 should not become endless therapy; otherwise inflation could accelerate and living standards could worsen.
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 official 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 pressure
In June, a meeting on economic matters acknowledged a drop in industrial output, including in 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.