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Russia’s car imports have evolved dramatically since its full-scale invasion of Ukraine in February 2022. The invasion and subsequent sanctions have led to a shift away from mainly Western car imports to domestically produced cars, and especially Chinese cars, both entailing quality concerns. Despite state sponsored loans reliefs, the heightened inflation pressures in Russia and increased financial burden on households is catching up to the car market – in the first quarter of 2025, the sales of new cars decreased by 25 percent compared to 2024. This policy brief uses the developments in the Russian primary car market as a lens to examine the spending power of Russian households and highlight the limitations of state interventions under sanctions and inflationary pressure. 

Key points from the policy brief

• After the 2022 invasion of Ukraine, nearly all Western car companies exited Russia, drastically shrinking options for consumers and leaving Chinese vehicles—despite higher costs and lower performance—as one of the only alternatives on the Russian car market.
  
  
• A government-backed loan program has led to a surge in auto borrowing, but rising debt and inflation are pushing many households to the brink. In 2023, 70% of all cars were purchased with borrowed money.
  
  
• Car sales dropped by 25% in early 2025, a sign that households can no longer afford major purchases, revealing deeper vulnerabilities in the wartime economy. Despite state subsidies, demand is falling—indicating that Russian families are feeling the strain of inflation, higher taxes etc., undermining their purchasing power.

Meet the author

• Cecilia Smitt Meyer: Research Assistant, Stockholm Institute of Transition ¹û¶³ÊÓƵ (SITE).
  Email: Cecilia.Smitt.Meyer@hhs.se

Photo: Andrii Yalanskyi, Shutterstock