Russia economy meltdown as car sales plunge 45% | World | News

Russia’s deepening economic crisis was exposed on Wednesday by figures indicating car sales had plummeted by more than 45% compared with last year, a sign of the country’s ongoing struggles following its invasion of Ukraine.

The figures appear to reflect a broader economic slowdown as sanctions, inflation, and the loss of Western companies continue to wreak havoc on key sectors. According to Russian analytical agency Autostat, sales of new cars in Russia saw a significant drop in March 2025. Just 79,822 vehicles were sold – a stark 45.5% decrease compared to the same month the previous year. This plunge is even worse than last month’s downturn, when sales fell by 24.9%, marking the first decline in nearly two years. The fallout has been felt across the economy, as fewer people are able to afford new vehicles due to a combination of sky-high interest rates, inflation, and the complete withdrawal of many major car manufacturers, such as Ford, Volkswagen, and Renault, from the Russian market.

A report in Russian newspaper Nezavisimaya Gazeta read out by Steve Rosenberg, Russia Editor for BBC News, said: “The fall in the energy markets will be very painful for Russia. In spring, 2025, the Russian economy was already somewhere between a decline and a recession.

“Now a global trade crisis, fall in demand in China and new anti-Russian sanctions could make the situation even worse for our economy. The decline in economic activity in Russia can be illustrated by the fall in freight traffic.

“On the Russian Railways in March this was down 7.2% on March 2024.”

Referencing the 45% figure, the report added: “New car sales are at their lowest level for a decade.”

In recent months, Russia’s economy has faced an increasingly dire outlook.

Economic growth is at a standstill, and the government’s ability to mitigate the fallout from international sanctions has been severely limited.

The sharp decline in car sales signals a major blow to consumer confidence, with ordinary Russians increasingly struggling to make ends meet.

Experts have pointed out that the absence of Western car manufacturers has had a catastrophic effect on the automotive industry.

With few alternatives available, Russians have found it difficult to find affordable vehicles, leaving a major segment of the market in chaos. This has had a knock-on effect on industries linked to car production, including parts manufacturing and logistics, further compounding the issue.

However, the crisis in Russia is not limited to the car industry. Freight traffic, a key indicator of economic activity, has also sharply declined, indicating that the country’s broader trade network is grinding to a halt.

Reports suggest that freight traffic has dropped by up to 20% in the past year, making it harder for Russia to maintain supply chains.

With sanctions on key sectors, including energy, and the increasing difficulty of importing goods, the country’s freight industry has been crippled.

This further isolates Russia from international trade and severely hampers its economic output.

The consequences of the economic slowdown are being felt across the population. The cost of everyday essentials in Russia has surged, with basic items now significantly more expensive for ordinary consumers.

For example, the price of a loaf of bread has risen to £1.10 (130 roubles), up from £0.70 (85 roubles) last year, while a litre of milk now costs £1 (120 roubles), compared to £0.75 (90 roubles) before.

Meanwhile, a kilogram of potatoes has seen a jump from £0.50 (60 roubles) to £0.80 (95 roubles), reflecting the impact of inflation and supply chain disruptions.

While the Russian government has continued to promote a message of resilience, there are growing concerns over its ability to manage the mounting economic challenges.

The sanctions imposed by the West are clearly having a lasting impact, and the Kremlin’s economic plans to “ride out” the crisis are being met with increasing scepticism.

While the government has yet to offer a clear roadmap for recovery, some economists believe that Russia’s economic meltdown could continue for years to come.

Speaking to Express.co.uk in January, John Kennedy, a Research Leader at RAND in the RAND Europe division, said: “The Russian economy has been affected to an extraordinary extent. It’s been completely redirected towards support for the war effort, and you can look at it in a number of different ways.

“You can look at it in terms of the transformation associated with the impact of sanctions. So that would be what you might call sort of Western influence on the economy and some examples of that would include transformation of ownership in some of Russia’s most important companies.

“Impact on individuals has meant that those companies are now in new hands, very often. Not in Russia’s most important energy sector, but if you look at the second tier of companies, including metals and mining, in particular, there’s been quite a lot of change in ownership.”