The Russian car industry has been facing a profound structural crisis that began in 2025 and continues to impact the market significantly. Sales of new cars have plummeted more than expected, particularly during the first ten months of last year. Experts attribute this crisis to various economic and financial factors, including market conditions, lending issues, and the pressures stemming from Western sanctions. With a contraction in the new passenger car market of approximately 15.5% to 15.6% last year, following remarkable growth in 2024, the market value has also decreased by 7.8%.

This downturn has affected even the leading Russian companies, notably AvtoVAZ, which has seen a sharp drop in demand for its vehicles since the start of 2026. Sales of Lada cars, manufactured by AvtoVAZ, fell by 26.2% in 2025 compared to the previous year. Although AvtoVAZ experienced notable recovery in 2022 when established foreign brands withdrew from the Russian market due to sanctions imposed after the onset of the Russian conflict, the sustained decline in consumer interest has posed serious challenges for the company and the entire automotive sector.

As the crisis unfolds, the Russian automotive market is witnessing an increasing presence of Chinese manufacturers, effectively altering the competitive landscape. This shift not only highlights the extent of the crisis faced by domestic brands such as AvtoVAZ but also raises concerns about the long-term implications for the Russian automotive industry, as reliance on foreign, particularly Chinese, vehicles may reshape consumer preferences and market dynamics in the years to come.