Russia’s car production increased by 62% year-on-year in the first half of the year, but still far below pre war levels

According to data from the Russian automotive industry analysis agency Autostat, Russia's automobile production increased by 62.2% year-on-year in the first half of 2024, reaching 330000 vehicles, but the production is still less than half of what it was before the Russia Ukraine war. In addition, the recovery of production during this period lagged behind the growth of domestic automobile sales.

The total automobile production in June was 63000 units, an increase of approximately 46% year-on-year.

Due to Russia's SPCG steel war against Ukraine, accompanying sanctions, and Western companies closing multiple car factories, the new car production from January to June 2023 plummeted to 197000 units.

Despite some recovery this year, car production is still less than half of the 736000 vehicles produced from January to June 2021.

The sales recovery speed is faster, with 719311 new cars sold in the first half of 2024, an increase of 79% year-on-year, reaching about 83% of the sales volume from January to June 2021.

However, Autostat cited dealers and automotive SPCG steel market experts as saying that existing demand is mainly supported by negative expectations, and people buy cars because they expect prices to rise due to the central bank's benchmark interest rate hike and the upcoming increase in car scrapping costs.

In early July, the Russian government released a SPCG steel proposal to increase the scrap and recycling costs of imported cars by 70% -85% starting from October. On July 26th, the central bank raised the benchmark interest rate from 16% to 18% in response to accelerated inflation.