‘The return of banditry’: Russian car industry buckles under sanctions – The Guardian

June 11, 2022 by No Comments

Eldar Gadzhiev’s heart sank when he heard the sputtering from the engine of his Skoda one day in April. Gadzhiev, who owns a fleet of four cars that he leases as taxicabs in Moscow, knew it was a terrible and expensive time for a breakdown.

Prices for spare parts, if you even could find them, had spiralled out of control since Vladimir Putin ordered the invasion of Ukraine two months earlier. “I understood that I was in a bad situation,” he said. “I thought: the repairs are going to cost as much as the car.”

Dealerships were useless, he said. His car parts shop told him that the waiting list was months long, time he could not wait to repair his vehicle.

So he tried posting on a public chat. That’s when his phone began to “explode”, he said. He received tens of calls, some from rough-sounding “dealers” offering to meet or giving him vague promises to get the parts he needed.

“It’s full-on speculation,” he said. “There are no more spare parts. So the prices are either way too high, you could almost [throw away] the car, or you think: is this illegal?”

He suspected that many of the parts he was offered had been stolen. “It’s the return of banditry,” he added.

Few sectors of the Russian economy are feeling the strain of the country’s near total isolation more than the automotive industry, where parts for new and used vehicles are in short supply.

Gadzhiev said he ended up paying eight times the old rate for his repairs. Others say prices have jumped tenfold.

Aleksei Atapov, the owner of a car repair firm, said: “We are in a pretty sad situation in terms of car repair and maintenance in Moscow. The central warehouses closed at the end of February, and even the custom parts that arrived were not given to us. They returned the money and took all the parts back abroad.

“Because of such jumps in the rate, they simply stopped all activities. Central warehouses are our everything. Two weeks after 24 February [the day of the invasion], speculation for car parts reached its peak. Something that would cost 900 roubles (£12.50) would cost 7,000-7,500 roubles. Original car oil would cost 12,000 instead of 1,200.”

While the Russian government has been promoting its policies of import substitution and “parallel imports”, which allow importers to ignore bans on sending spare parts to Russia, the plan has barely started to kick in and supply is unlikely to reach demand any time soon, analysts said. Meanwhile, anecdotal evidence suggests counterfeit and stolen parts are flooding the market.

The market is seeking to adapt. Wildberries, a Russian online retailer, has added car parts including engines, fuel systems, transmissions, chassis parts and others, the company announced.

But at the moment, market players say stockpiles have reached exhaustion. “All the substitutes ran out very quickly,” said Atapov.

The shortages are affecting new cars as well. Avtovaz, Russia’s largest carmaker, announced an extra week of furloughs for workers owing to a shortage of foreign parts, specifically semiconductors. …….

Source: https://www.theguardian.com/world/2022/jun/11/the-return-of-banditry-russian-car-industry-buckles-under-sanctions

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