Russia's Car Market Struggles Amid Scrappage Fee Surge

Russia's car market recovery faces significant challenges as higher scrappage fees raise prices. A spike in October sales underscores a rush to beat the fee hike. Despite Chinese brands' success, sales volumes remain critically low as economic conditions and policy changes weigh heavily on consumer purchasing power.

As 2025 draws to a close, Russia's car market is showing fragile signs of recovery, yet experts predict it may hit near-record lows early next year due to rising scrappage fees. Industry insiders attribute a jump in October car sales to buyers rushing to beat the impending price hikes.

The increase in sales, however, is not indicative of a true recovery, reflecting instead the deep-rooted structural challenges in Russia's automotive sector that have persisted since the 2022 invasion of Ukraine. These challenges include the exit of Western manufacturers and enduring high interest rates, which have inflated car loan costs.

Scrappage fees, intended as protective measures for local carmakers like Avtovaz, are poised to rise significantly. This affects both domestic and imported vehicles, driving up costs across the board. Despite efforts to buoy the market, the outlook remains grim as the overall economic slowdown continues to erode consumer purchasing power.

(With inputs from agencies.)