Russia goes retro: New car sales in the country continue to fall

The situation is no better at the key sites once owned by Western automakers, which in 2024 produced output at around 10% of total capacity. The former Nissan plant (now Avtozavod Saint Petersburg) cut its 2025 production target threefold (to 6,500 cars), recently suspended the launch of a new model, and sent staff on a three-week leave. The former Toyota plant (Shushary Auto in Saint Petersburg) has been idle since March 2022, racking up multimillion-ruble losses. The former General Motors factory in Shushary also stands idle, though it is preparing to launch production of Chinese models.

However, the former Hyundai plant in Saint Petersburg and the former Volkswagen plant in Kaluga, now part of AGR Holding, are showing growth: in the first half of 2025, the Saint Petersburg site produced 18,300 cars (+74.3%), while the Kaluga site launched a second model in partnership with a Chinese manufacturer. Still, they are far from reaching design capacity. A similar situation exists at the former Mercedes-Benz plant (Automobile Plant of the Moscow Region), relaunched in July 2024 with a Chinese partner.

The new owners of these plants have ambitious plans, but they are constrained by a limited business model — expensive large-unit assembly with gradual introduction of more complex operations (stamping, welding, body painting, and so on). This setup prevents them from competing on cost or quality — not only when going head-to-head with domestic maker AvtoVAZ and various Chinese imports, but also with the Tula region’s highly localized production facility for Haval, a Chinese company which also has ambitious expansion plans in the Russian market.

At the same time, the Chinese cars produced at local assembly facilities raise concerns among industry analysts and car owners alike. They are regularly subject to large-scale recalls due to safety or software issues, are often poorly adapted to Russia’s climate, and lag behind European and Japanese counterparts in reliability. A trend is already emerging in which Russian dealers refuse to sell certain Chinese brands, and cases of mass closures of dealerships representing Chinese manufacturers have also been notable.