Decrease in auto loan issuance by 43.2% in the second quarter compared to the same period last year
Russian Car Market Faces Significant Contraction in 2025
The Russian car market is bracing for a substantial contraction in 2025, with sales expected to decrease by around 24-30% compared to 2024. This forecast comes from various associations, including the Ministry of Industry and Trade-related bodies and the Association of European Businesses.
The Association of European Businesses has revised its forecast downward to a 24% contraction, projecting sales of 1.25 million units in 2025, a reduction from an earlier estimate of 1.4 million vehicles. Analysts attribute the decline to lower consumer demand due to high borrowing costs, elevated fees, and economic challenges.
The Avtostat analytical center and the Automobile Manufacturers Committee foresee the baseline sales at 1.25 million vehicles but warn of a possible worst-case scenario of 1.1 million vehicles, implying a 30% market contraction. The largest Russian carmaker, Avtovaz, anticipates a 25% drop in its sales to about 1.1 million vehicles and is even considering a 4-day workweek as part of adjustments.
However, there is some hope for stabilization or recovery if the government renews state support programs and the Central Bank continues to cut key interest rates, which recently decreased from 21% to 20%.
Monthly sales data reflects ongoing declines, with June 2025 showing a 31.1% fall compared to June 2024. According to Alexei Volkov, director of marketing at the National Credit History Bureau (NCHB), the market has formed a significant pent-up demand after a prolonged increase in the rejection rate for auto loan applications. The NCHB reports a 43.2% decrease in auto loans issued in the second quarter of 2025 compared to the same period in 2024, with a total of 253,300 loans issued.
Sales of new passenger cars in Russia in January-May 2025 fell by 26% to 437,000 units. Sales of trucks in Russia during the same period decreased by 52% to 23,476 units, and sales of buses decreased by 53% to 4,262 units. In contrast, sales of light commercial vehicles decreased by 17% to 41,677 units.
The decline in sales is not limited to the domestic market, as almost half of Russians do not believe that foreign cars will return to Russia. There is a potential for scrap fees to be extended to imported vehicles with an engine capacity of 160 hp and above.
In an effort to stimulate demand, the subsidized car loan program was expanded in May of this year for families with two or more children, and under the new conditions of the "Family Car" subprogram, families with children receive a 10% discount on the cost of the car.
In summary, the Russian Ministry of Industry and Trade and related automotive industry bodies foresee a substantial contraction in the 2025 car market, primarily driven by economic pressures and reduced consumer purchasing power. However, there is potential for stabilization or recovery if government measures are implemented.
The contraction in the Russian car market may also impact other sectors, such as finance, with a potential decrease in loans issued for vehicle purchases.
The decline in automotive sales could affect the transportation industry, as fewer cars on the market may lead to a shortage of vehicles available for purchase, potentially disrupting transportation systems and logistics for both businesses and individuals.
