Mass layoffs occur at multiple automobile dealerships across Russia
Gear Down: Car Dealerships Brace for Staff Reductions as New Car Sales Plummet
In a stark shift for the Russian automotive industry, experts predict a wave of staff reductions at car dealerships. Dmitry Popov, an auto expert, shared his insights with Ridus.ru, stating, "The auto industry is in a deep crisis, forcing car dealers to cut staff to maintain operations during tough times when high interest rates on loans have slashed demand by about a third. There's no other way out. The most severe job losses will be at car dealerships, primarily affecting sales representatives."
This dismal outlook is supported by declining new car sales across all segments. According to recent reports, Russia's new car sales dropped by 27% during the first quarter of 2025, with a total of 287,200 cars sold. A more detailed breakdown reveals that 245,000 passenger cars (-26%), 24,300 LCVs (-16%), 15,400 trucks (-46%), and 2,500 buses (-55%) were sold. The sales of electric vehicles also plummeted, with a 67% decrease, selling only 2,100 units.
Sergei Tselikov, head of "Auto.Stat", conducted a poll in his Telegram channel and found that high bank interest rates are the primary cause for the decrease in demand for new passenger cars in the country, with 63% of respondents acknowledging this as the reason.
The dominance of major automakers like Stellantis (Citroën, Peugeot) has largely disappeared, with local entities now assembling vehicles using Chinese-sourced kits, like Dongfeng Peugeot-Citroen. However, this shift faces challenges:- Loss of brand control due to the disavowal of operations by Stellantis, creating legal ambiguities and supply chain risks.- Revenue declines as a result of Western sanctions impacting remaining foreign-linked operations.
The departure of major automakers has fragmented distribution networks, leading to reduced inventory and price inflation for consumers. While US tariff-related disruptions, such as Japanese automakers rerouting supply chains, do not directly affect Russia, they serve as an example of the global auto sector’s volatility, which could indirectly pressure strategies in other markets like Russia.
In addition to these external factors, domestic pressures such as staff reductions and weakened consumer demand due to economic sanctions and inflation also contribute to sales declines. Foreign-owned entities, like a tire manufacturer, have already reduced their workforce from over 1,000 employees to approximately 70 between 2021 and 2022, setting a precedent for continued workforce cuts.
In summary, the auto sector in Russia faces layoffs and sales declines due to sanctions-driven production halts, supply chain localization challenges, and weakened consumer demand. Brace yourselves, as this perfect storm may just be the tip of the iceberg.
- In light of the predicted staff reductions at car dealerships, Dmitry Popov, an auto expert, suggests that the auto industry is in a deep crisis, resulting in layoffs for sales representatives.
- The decline in new car sales across all segments in Russia has been significant, with a 27% drop during the first quarter of 2025, affecting not only passenger cars but also LCVs, trucks, buses, and electric vehicles.
- According to Sergei Tselikov, high bank interest rates are the primary reason for the decrease in demand for new passenger cars in Russia.
- Foreign-owned entities, like a tire manufacturer, have already reduced their workforce due to economic pressures, setting a precedent for continued workforce cuts, particularly in the face of ongoing sanctions and inflation.
