Demand for pre-owned cars rise in Russia as global brands shun auto sector

The Russian automotive industry has faced the full force of sanctions against the country in the aftermath of invasion of Ukraine. With almost every major international automotive brand exiting the Russian market, the number of options for a potential buyer has fallen to a level where customers are now buying pre-owned vehicles like never before.

Companies like Mercedes-Benz, Volkswagen, Ford, Renault, Nissan, Toyota, Honda and BMW, among others, have exited the Russian market since the country's forces invaded Ukraine in early 2022. While many of these brands have halted manufacturing processes, others have stopped importing cars. This has led to increased demand for cars manufactured by local brands like Lada and Gaz although supply-related issues persist. So those who are in dire need of vehicles have turned to the pre-owned vehicle segment.

Automotive News Europe reports that spending on new cars in Russia came down by 52 per cent to 1.5 trillion rubles ($20.4 billion) while new cars sold in the year fell by 59 per cent. As for new car production, it is the lowest now since 1991 when the Soviet Union collapsed. Data from the country now show that sales of pre-owned vehicles now account for two-thirds of all vehicles sold. "Money flowed into the used cars market as prices for second-hand cars held up, while at the same time, the structure of the new cars market changed significantly," Autostat CEO Sergei Udalov told Reuters. “Budget Ladas and Chinese cars with prices of 2 million rubles and more remain in it, while premium brands have almost completely left."

Inflationary pressures are also having an impact. With less disposable money with local Russians than before, buying decisions have become far more cautionary. Many are opting to purchase previously-owned vehicles that were manufactured in western countries than the limited options from local and Chinese players.