Russia economy meltdown as biggest carmaker slashes workweek amid sales crisis

Russia's biggest car manufacturer is contemplating cutting its workweek to four days amid a catastrophic sales slump. Avtovaz, which produces the country's best-seilling car brand, said it could introduce the change on September 29 as it battles competition from the Chinese market. The Lada was the most widely produced family of cars during the Soviet Union and remains the most common car in the country.

Its maker already cut its work week across its factories, introducing a temporary four-day week for three months in 2022 - around the onset of the war, which saw a mass exodus of foreign industries from Russia. On Tuesday, Avtovaz once again considered the move. It told Russian media that the decision will come down to "market trends and economic factors".

The firm said in a statement: "At the same time, the company emphasises that the final decision on the introduction of a partial four-day workweek will be made based on the results of an analysis of market trends and economic factors, including the level of the key rate and the availability of credit products."

Its sales have been hit hard by stricter rules on car loans and high interest rates imposed by Moscow amid economic sanctions from the West.

A large number of cars were also imported to Russia in 2024, a large number coming from China as almost all other international car brands stopped dealings with Moscow when the war began.

Over one million vehicles came from Beijing last year - seven times the amount in 2023.

Avtovaz slammed these imported brands for "pursuing a police of price dumping", claiming their warehouses store over 400,000 unsold cars.

Forecasts for the country's top carmaker are only expected to get worse, with sales estimated to drop 25% this year to 1.1 million vehicles.

Car sales are dropping across Russia, according to local auto analsis form Autostat, which said just 90,116 new passenger cars were sold in June, down 27.6% from the same month last year.

Roughly 200 dealerships have closed since the start of the year, representing 5% of those across the country.

Alexey Podschekoldin, head of the Russian Automobile Dealers Association, told Autonews that another 30% of dealerships face financial pressures and are at risk of closing.

The average car brand in Russia sells just 12,900 per year, a whopping 28 times less than the US, despite having nearly three times as many brands in the country.