Discussed by RAD was the current condition in the automotive market
In 2025, the Russian automotive market is grappling with significant economic challenges, including a decline in car sales and increased competition from Chinese manufacturers. Amidst these difficulties, car dealers in Russia are implementing various adaptation strategies to weather the storm.
Adaptation Strategies for Car Dealers
- Shortened Work Week at AvtoVAZ
- In response to declining sales and increased competition, AvtoVAZ, Russia's largest car manufacturer, is planning to implement a four-day work week starting from late September 2025 [1][2].
- Diversification of Sales Channels
- Car rental companies are adapting by updating their fleets with newer models to capitalize on the recent uptick in car sales. This includes offering a variety of vehicle types to cater to evolving customer preferences [3].
- Market Flexibility
- Car rental services are focusing on flexibility and convenience, offering a wide range of vehicles and leveraging advancements in online booking systems to enhance the customer experience [3].
- Economic Adjustments
- The Russian market is experiencing volatility due to economic factors like high interest rates and declining real incomes. Dealers may need to adjust pricing strategies or offer more competitive financing options to attract customers [1][4].
- Supply Chain Diversification
- Although not directly impacting dealers, manufacturers concerned about palladium tariffs might diversify their supply chain. This could indirectly affect dealers by changing the availability of certain vehicle models or technologies [5].
The Service Business: A Beacon of Stability
Amidst the market downturn, the service business is currently considered the most stable and profitable sector for car dealers. The demand for service specialists, particularly master receivers and auto haulers, increased by more than 60% in the first half of 2025, according to "Avito Jobs."
The Road Ahead
Experts have identified several adaptation scenarios for car dealers, including reducing the number of contracts and staff, re-profiling dealerships to more promising brands, and strengthening the service business and used car sales. The total number of car dealerships in major Russian cities is growing, primarily due to those working with used cars and Chinese brands.
However, maintaining the dealer infrastructure will be extremely challenging without state involvement, affecting jobs and nationwide auto service accessibility. Small companies and regional dealers are particularly feeling the pressure due to inflated plans from automakers and rising operational costs.
The Ministry of Industry and Trade has reported the sales figures for the first seven months of 2025, with around 742,000 new cars sold in Russia, which is a quarter less than the previous year. Leading market players predict a 10-12% increase in sales volume starting in 2026, marking the potential bottom of the crisis. This potential increase relies on a further reduction of the key rate and state support.
[1] Domestic producers sold over 408,000 vehicles, with an 8% decrease in sales compared to the previous year. [2] More than 200 dealer contracts have been closed in Russia since the beginning of the year, with this trend continuing. [3] "Rolf" has stopped pre-purchasing cars to avoid excess inventory. [4] "Avilon" has reoriented some of its trading points to new brands. [5] "Car dealers in current conditions are rethinking business management strategies due to the rise in borrowed fund costs, unstable demand, and market downturn."
- In light of the challenging business landscape, some car dealers may consider diversifying their operations to include financial services, such as offering competitive financing options, to attract more customers and compensate for declining car sales.
- As the service business proves to be a stable and profitable sector, dealers may focus on strengthening their service departments and used car sales divisions as part of their adaptation strategies to navigate the economic difficulties facing the Russian automotive market.
