Crazy car racing: how to stop the rise in car prices?

Car sales fell more than 50% last year, while prices rose by a third. Despite the worst performance over the past 20 years, the car market in Russia continues to be in a fever. Since the beginning of the year, cars have continued to rise in price, although not so rapidly. We are trying to figure out what to expect for lovers of fast driving.

Why are prices rising?

The car market of the Russian Federation has recently experienced significant difficulties. The dollar, which has risen in price by 15% since the beginning of the summer, has caused excitement, and some talk of panic among car dealers and sellers. In car dealerships, you can increasingly see “floating” price tags for cars, and most sellers have already canceled discounts on them.



Many fear that the ruble will continue to lose its positions, which will lead to a further increase in car prices. It is expected that this will hit hardest on cars imported into the country under the parallel import scheme. Sellers, not wanting to lose profits and rewrite price tags, froze in bewilderment. The instability of the exchange rate, according to experts, will be reflected in price lists within a couple of months in the form of an increase of 5-10%.

In addition, from August 1, the government plans to increase the size of the recycling fee, which will also affect the cost of cars. It is assumed that this decision may provoke an increase in prices by another 10-15%. Most of all, these changes will affect cars with an engine capacity of 3 liters and above. For such models, an increase in the recycling fee can be 1-1,2 million rubles.

However, cars with an engine capacity of 1-2 liters continue to be the most popular among buyers. For these models, the increase in the recycling fee can be about 300 thousand rubles.

On average, car prices can rise by 5-8%, so most analysts agree that it is better to buy a car now, since price reductions should not be expected in the short term. In addition, new car prices could rise towards the end of 2023 due to payment and logistics issues.

Will car prices go down?

The cost of a car is determined not only by the appetites of manufacturers and the exchange rate. A significant contribution to the final price tag for the consumer is made by dealers, who have recently included all possible risks in the price. The Consumer Protection Council has approached the Russian authorities with a proposal to limit car dealers to a maximum mark-up of 15%. It is not known whether this decision will be supported, but AvtoVAZ acted more resolutely, threatening too greedy dealers to stop deliveries. Such statements have taken effect.

Despite all the difficulties, the domestic car market continues to develop. In June, 52 new cars were sold in Russia, which is 279% more than in the same period last year. Sales growth was driven by an increase in the number of Chinese brands and an increase in the production of domestic brands.

Russian Prime Minister Mikhail Mishustin, visiting the Innoprom exhibition in Yekaterinburg, said that he sees great prospects in the localization of the production of auto components and cars of Chinese companies. DongFeng Motor Corporation, one of the largest automakers in China, plans to increase its model range for production in the Russian Federation. Now the Chinese giant is closely cooperating with the Russian Motorinvest, which produces electric vehicles under the Evolute brand. This summer, they plan to start assembling electric crossovers, and then seven-seater minivans.

The same DongFeng may also be produced under the Lada brand. It is possible that the line will be launched at the end of the year. There are no details yet, but, apparently, the assembly will proceed by analogy with the Moskvich, that is, from car kits made in the Middle Kingdom, a finished car will be assembled here. Experts suggest that the Chinese Shine Max sedan, which was recently presented in Russia, will be assembled in Togliatti. With an increase in supply, it is logical to expect that the price tags will come to some sense, but most likely there will not be a serious decrease.

Should we wait for the production of our own cars?

Russian manufacturers have recently done a lot to localize production. An assembly line for anti-lock braking (ABS) and anti-skid (ESP) systems has already been launched in Kostroma. It is planned that during the year about 200-250 systems for passenger cars will be made on the basis of the enterprise. In the future, the plant will be able to produce about 850 systems per year. Their localization so far fluctuates around 25%, but in two or three years, manufacturers hope to reach the level of 70-75%.

New production facilities in the Russian Federation appear almost every week. One of the latest examples is the launch of the production of diesel engines of a new family at the plant in a special economic zone "Alabuga". This event will be a significant step in strengthening Russia's position in the global automotive market.

The domestic auto industry is facing serious challenges. As part of the new project, it is planned to fully localize all key technological operations. This includes casting, forging, machining of basic engine parts, as well as assembly and proof testing. This approach will ensure high quality of products and strengthen competitiveness.

It is important to note that the new engines will comply with Euro-6 standards. This means that they will meet the most stringent environmental requirements.

One of the main problems of manufacturers of automotive components is the low sales volume. This does not allow them to set a competitive price for their products, which affects the final cost of cars. The Ministry of Industry and Trade of Russia offers two options for solving this problem: increasing the production of components or reducing the costs of manufacturers. Experts note that for the growth of volumes, it is necessary to unify components that can be used on different models of cars from different manufacturers.

According to Albert Karimov, deputy head of the Ministry of Industry and Trade, there are now about 800 critical components in the Russian Federation that are needed by the domestic auto industry. He noted that solutions have already been found for some of the components and assemblies that were previously imported into the country. Another 500 positions require localization. The production of some of these components can be established by the Russian auto enterprises themselves, while some components will either have to be imported or production can be established with the help of the state.

Despite the difficult economic situation, the domestic car market continues to develop. Support from friendly countries such as China helps to strengthen the position of the automotive industry and opens up new prospects for its development. At this stage, the country uses ready-made foreign solutions, but the course towards the creation of its own critical nodes is already clearly visible.