How Russia’s invasion of Ukraine is impacting automakers, Russia Car Manufacturing Suffers A 97% Collapse

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Since the beginning of the Russian-Ukraine war, Auto production in Russia has slowed to a crawl after the major automakers exited and Western governments imposed debilitating sanctions on Moscow in response to its invasion of Ukraine.

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In May, Russia manufactured 3,700 cars, 97% fewer than the same month last year, the county’s statistics agency Rosstat said late Wednesday.

Output fluctuated at the start of 2022 with 95,000 cars in January and 108,000 in Feburary, before reducing drastically to 40,800 in March—the first full month after President Vladimir Putin ordered troops to attack Ukraine.

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Russia manufactured a total of 268,000 vehicles between January and May this year, less half of the amount over the same time last year.

In May, truck and bus production fell by nearly 40% and 6.5% respectively, compared with May 2021.

In Russia, the automotive industry employs 300,000 people and 3 million more work in related industries.

Only two out of 20 car plants remain in Russia after major automakers halted production and stopped sales over the country’s invasion of Ukraine.

Also, the sales of the country’s most popular and affordable brand, Lada, sank by nearly 84% in May, the Association of European Businesses has said.

Trade and Industry Minister Denis Manturov has attributed the 30% price hike for vehicles to inflation, rising costs of parts and strengthening ruble.

President Vladimir Putin this month ordered a new strategy to reduce the automotive industry’s reliance on foreign technology and ensure “global competitiveness.” The question is, how will this take shape in Russia?