**Russian Car Dealerships on the Brink of Collapse**
Russia’s auto market is facing a dire situation, with nearly one in five car dealerships at risk of shutting down by the end of the year. The Moscow Times reported on July 31 that plummeting sales and a worsening economic outlook are to blame for the collapse.
**Sanctions Take a Toll**
The country remains under Western sanctions imposed over its invasion of Ukraine, leading to a significant drop in demand for new cars. According to AutoStat CEO Sergey Tselikov, 137 showrooms closed in the second quarter alone, bringing the total number down to 2,950. The number of active dealership contracts also dropped by 183 to 4,330.
**Companies Cutting Loses**
As a result, companies are reassessing their operations and shutting down unprofitable locations. Andrey Terlyukevich, CEO of the AutoSpecCenter group, said that brands with low monthly sales per dealer are most at risk. Some companies have even exited the used car market altogether.
**Apathy Sets In**
Avtodom CEO Andrei Olkhovsky described a sense of apathy among dealers, who had initially hoped for a rebound in sales. Instead, many are considering repurposing their locations or pulling capital out of the industry altogether. Most dealers are now operating at near-zero profitability, squeezed by pressure from Chinese distributors.
**Regulatory Challenges**
Earlier this year, Russian authorities took steps to curb the influx of foreign vehicles by more than doubling the “recycling fee” for most passenger cars. Regulators also banned the sale of a Chinese truck model over alleged safety violations.
**Market in Shambles**
AutoStat estimates that Russia’s car market shrank by 28% in the first half of 2025, with just 530,000 new passenger vehicles sold. Dealers are now holding 500,000 unsold cars, enough to last four to seven months – a far cry from the typical two-month inventory threshold.
**Conclusion**
Russia’s auto market is facing unprecedented challenges, with nearly one in five car dealerships at risk of closure. The sanctions imposed over Ukraine’s invasion have taken a significant toll on demand, while regulatory challenges and pressure from Chinese distributors are squeezing profitability. It remains to be seen how the industry will recover from this downturn.
Read More @ kyivindependent.com
