Russia’s Putin says govt must support domestic car industry

• Russian car sales fell a record 83.5 percent in May due to a squeeze on demand from Russian purchasers and significant logistics issues.
• Car prices have risen about 50% since the beginning of the year.
• smashing demand in a country where household incomes have fallen and inflation is hovering near 20-year highs.

On Thursday, Russian President Vladimir Putin directed his government to devise fresh measures to boost the domestic automobile industry, which has seen sales plummet since Moscow’s invasion of Ukraine.

According to estimates from the Association of European Businesses, car sales fell a record 83.5 percent in May due to a squeeze on demand from Russian purchasers and significant logistics issues as a result of Western sanctions imposed on Moscow (AEB). find out more

“I’d like to ask the government to explain us in full what swift actions it is taking to support the auto industry and stabilise the internal market,” Putin said in a meeting with government officials that was televised on state television.

Putin also stated that the administration must consider not only production challenges, but also how to boost demand despite the country’s economic woes.

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Car prices have risen about 50% since the beginning of the year, according to Rosstat, smashing demand in a country where household incomes have fallen and inflation has been hovering near 20-year highs.

In recent weeks, a number of Russian authorities have expressed concern about a likely drop in economic demand, which might exacerbate the country’s economic crisis, which is already predicted to be the worst in at least two decades.

Despite a high-profile import substitution campaign, Russia’s auto industry is still significantly reliant on foreign investment and equipment.

Avtovaz, Russia’s largest automaker, has put a stop to manufacturing for more than two months, citing a shortage of electrical parts. find out more

In May, the French automaker Renault agreed to sell its controlling ownership in Avtovaz to a Russian science institute for the symbolic sum of one rouble, with a six-year option to acquire it back.