Russian Auto Market Shrinks in Value for First Time in a Decade Amidst Price Hikes

Russia - Ekhbary News Agency

The Russian automotive market, a vital engine of the nation's economy, experienced a significant shift in 2025, recording its first monetary value contraction since 2015. The overall market value fell by 7.8% to 13.8 trillion rubles. This decline occurred despite a concurrent rise in the prices of both new and used automobiles, according to data from the Association of Russian Automobile Dealers (ROAD). This represents an unprecedented downturn over the past decade, prompting questions about the sector's future outlook.

Analyzing the Figures:

In 2025, new cars accounted for 33% of the market's monetary value, amounting to 4.61 trillion rubles. This figure represents an 18.4% decrease compared to the previous year. Used cars, conversely, captured a larger share of 67%, totaling 9.18 trillion rubles, marking a more modest decline of 1.4% year-on-year. Despite these value decreases, the average price for a new car saw a 6% increase, reaching 3.54 million rubles, while the average price for a used car rose by 4% to 1.35 million rubles. This divergence between falling overall value and rising unit prices highlights the complex interplay of economic factors influencing the market.

Root Causes of the Contraction:

Industry experts point to a confluence of factors driving this contraction. Vladimir Bespalov, a senior analyst at Euler company, notes that the decline in the physical volume of sales was more substantial than the price increases. On the new car market, factors contributing to this included market saturation, a subtle shift towards sales of lower-cost vehicles, and the strengthening of the ruble, which made imported cars more accessible. The used car segment, while relatively more stable, was influenced by similar trends, alongside the general aging of the vehicle fleet.

Nikolay Ivanov, Director of New Car Sales at Rolf, echoes this sentiment, explaining that previously aggressive average price growth was no longer sufficient to compensate for the falling sales volume. ROAD estimates indicate that sales of passenger cars and light commercial vehicles in the primary market decreased by 16.4% to 1.4 million units. In the secondary market, sales volume fell by 2.4% to 7.07 million units.

Ilya Petrov, Director of Retail Sales at the Avilon Group, further elaborates that the structure of demand plays a crucial role, including the ratio of premium to mass-market segments and the overall purchasing power of consumers. Petrov describes the situation – a market decline in monetary terms despite price increases – as not unique, but rather a result of several overlapping factors. He also recalls that in years with significant declines in new car sales, the used car segment traditionally compensated for a portion of the drop, including in monetary terms.

Impact on Dealerships:

While a decrease in monetary sales volume is generally viewed negatively, market participants emphasize that this scenario does not automatically translate to dealership losses. Nikolay Ivanov explains that dealerships primarily focus on "specific profitability," which is determined by the balance of supply and demand, and inventory levels. While market size and revenue are important indicators, they are not the sole determinants of profitability.

Ilya Petrov corroborates this, stating that a decline in market value doesn't automatically spell losses for dealerships. Financial results are driven more by the balance between supply and demand than by the sheer volume of the market. He notes that dealerships can sell large volumes of cars but earn little if faced with intense competition, limited demand, and low margins. Conversely, with more moderate sales volumes but controlled costs and a clear pricing strategy, a dealership can remain profitable.

Future Outlook:

The consensus among interviewed dealers and experts is that the Russian auto market is likely to see a monetary value increase in 2026. Nikolay Ivanov anticipates positive dynamics if new car sales reach at least 1.3 million units, coupled with a 10-11% increase in the average weighted price. Vladimir Bespalov forecasts a potential 10-15% increase in market value for the current year. "This should be facilitated by a moderate market recovery and price increases influenced by inflation and a possible weakening of the ruble," the expert believes.

These projections offer a glimmer of hope for Russia's automotive sector, which faces considerable challenges amidst current economic conditions. The key will be the market's ability to adapt, balance evolving consumer demand with cost management, and maintain profitability in a dynamic environment.