Carmaker forecasts 30% collapse in Russian car market by 2025

Sales of new cars and light commercial vehicles in Russia could decline by 21-30% in 2025 if high interest rates persist, Avtovaz CEO Maxim Sokolov said on Nov. 19, according to the state-owned TASS news agency.

Sokolov attributed the anticipated decline to customers diverting savings from car purchases to bank deposits due to elevated interest rates.

Russia's central bank raised its key interest rate to 21% in October, its highest level since 2003, aiming to curb inflation caused by massive wartime spending to meet its 2026 target.

"This will undoubtedly have a negative impact on the market and production plans in the medium term," he said, warning that Avtovaz’s current production levels will not be sustainable under such economic conditions.

The state-owned Avtovaz is Russia's largest carmaker, best known for its flagship Lada vehicle series.

The high rates are not only affecting the automotive sector but also threatening Russia’s broader economy. Izvestia reported on Nov. 13 that about 30 Russian airlines, responsible for 26% of domestic passenger traffic, are at risk of bankruptcy in 2025 due to economic pressures.