Ask any Russian they associate with the city of Tolyatti and the answer is automatic: cars.
Tolyatti is the Detroit of Russia, home of Avtovaz, where Lada is produced, ubiquitous Russia mainly because the brand is homegrown and cheap.
If you want to know how sanctions are affecting the Russian economy, Avtovaz is a good place to start.
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Not Avtovaz, now back in state hands, will allow us into the factory.
The media department is skeptical, believing that we will mock the fact that new models come off the production line. no airbags, air conditioning or anti-lock brakes.
We suggest that the bearish patterns speak for themselves. We were not allowed in.
Russia’s car industry has been flat since Vladimir Putin send troops in Ukrainelargely due to rising prices, supply chain effects, and anxiety for Western automakers as they finalize their exit strategy.
Renault, which owns a majority stake in Avtovaz, pulled out in May, handing over its shares to the Russian state albeit with a six-year buyback clause.
Volkswagen, Russia’s largest foreign investor, is reportedly looking for a buyer for its Kaluga plant – and its workers there will be boosted until the end of 2022.
Auto sales have plummeted, down 75% year-on-year according to the AEB Commission of Automobile Manufacturers, with Avtovaz down 68% year-on-year.
Production at Avtovaz’s vast Tolyatti plant was halted in April and May but resumed in June.
The first Granta and Niva models to come off the production line after the pause were upgraded to include the GPS emergency alert system that was initially missing.
Airbags aren’t available yet, but they should be available by the end of August. Anti-lock brakes will arrive from China at some point next year.
In June, Grigory Basovitiy of the Molot union in Tolyatti gave an interview in which he gave a complete list of spare parts that Avtovaz is having trouble sourcing.
“Today most of those problems have been solved,” he told us. Now the problem is logistics, getting parts from China or Kazakhstan.
“The fact that China has the capacity and technology and they are replacing what Europe has given up is no secret. We have heard Western manufacturers say that if they leave, someone will be there. another replaced them. And now we see how that works.”
Lada Granta sign greets you as you step out of the airport
‘It’s not like the Soviet era’
A lot of Western companies are sitting still, their operations stalled or really not.
According to analysis from strategy consulting group Macro-Advisory, most of the companies leaving are small (i.e. in the retail sector), or have sold to local buyers (such as Renault or McDonald’s).
“We calculate an impact on GDP below 1% as operating assets will remain in the country,” its latest research note reads.
“Russia is still part of the market despite the sanctions,” said Azat Temirkhanov from Autostat in Tolyatti.
“It’s not like the Soviet era when there was an iron curtain. We’re still economically integrated, we just need to rebuild the supply chains.”
That is the message the Russian state wants to give. But doomsday predictions from the first few months of sanction headlines have softened slightly.
Avtovaz produces Lada, which is popular throughout Russia mainly because the brand is home-grown and cheap
‘A lot for your sanctions’
The Central Bank of Russia has improved its forecast for a GDP contraction this year, from 4 to 6% instead of 8 to 10%.
Their revised International Monetary Fund dropped from 8.5% to 6%.
The prospects are not great, the Russian economy is going through extremely difficult times. But that is not yet the economic death knell that some Western think tanks claim and Ukraine advocates may be hoping for.
Tolyatti has been through tough times before. The workers we spoke to were very disappointed in wages and were hoping to go back a week and five days; sanctions seem to have only secondary significance.
“You and your sanctions,” says Yuri Mukhoed, who has served for two years and has worked for Avtovaz since the 1990s.
“Imposing sanctions against Russia is futile. Russia is self-sufficient.
“We wanted to be kind, unifying the whole world around us, and now it turns out nobody needs us. Well, if you don’t want us, understand this: Europe is done now. , dead. They have come. Will they survive the winter without Russian gas and oil? With firewood? They still need Russia. Your sanctions are many.”
People relax in Victory Park, built by Avtovaz
Tolyatti is the beating heart of Russia’s car industry, which has been hardest hit by sanctions to date.
At the city’s Victory Park, a new urban area developed by Avtovaz to celebrate its 50th anniversary, teenagers play table tennis and basketball to Russian rap music.
In another corner, couples dance salsa. The evening sun set after another hot day.
On the surface, as the Russians continue to enjoy their summer, you might be forgiven for thinking they forgot that there was a war.
