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‘It’s not like Soviet times’: How one Russian city is coping with sanctions

Ask any Russian about their association with Tolyatti, and they will tell you: cars.

Tolyatti, Russia’s Detroit is where Avtovaz produces the Lada. This brand is ubiquitous throughout Russia, largely because it is cheap and home-grown.

Avtovaz is an excellent place to begin if you want to understand how sanctions affect the Russian economy.



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We would not be allowed into the factory by Avtovaz now that he is back in state control.

We were convinced that we would make fun of the fact that older models are without airbags, air conditioning, or anti-lock brake systems.

We suggested that the models with fewer features speak for themselves. We weren’t let in.

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Russia’s automobile industry has suffered since Vladimir Putin sent troops to Ukraine. This was mainly due to price increases, supply chain hits, and the nervy exit strategies of Western carmakers.

Renault, which held a majority of Avtovaz’s shares, quit in May and gave its stake back to Russia with a buy-back clause of six years.

Russia’s largest foreign investor, Volkswagen, is reportedly looking for buyers for its Kaluga plant. The workers are currently furloughed until the end 2022.

According to the AEB Automobile Manufacturers Committee (AEB), car sales are down 75% from July 2013, with Avtovaz reporting a 68% decrease in sales during the same period.

The vast Tolyatti factory of Avtovaz was shut down in April and May, but production resumed in June.

After the pause, the first Granta and Niva models have been upgraded to include GPS-based emergency alert systems that were not available initially.

Although airbags have not yet been introduced, they will be before the end of August. Antilock braking systems will be available from China by next year.

Grigory Basovitiy, a member of the Molot trade union from Tolyatti, gave an interview in June where he recited an extensive list of spare parts Avtovaz had difficulty finding.

He tells us that most of these problems are solved today. The problem now is logistical: getting parts from China or Kazakhstan.

It is not secret that China has the technology and capabilities to replace Europe’s lost technologies. Western manufacturers have already told us that they will be replaced if they go. We now see how it works.

Image As you exit the airport, you will see the Lada Granta sign.


“It’s nothing like Soviet times”

Many Western companies are putting off their operations or simply avoiding them altogether.

Macro-Advisory’s analysis shows that most companies that have gone are small. in retail fashion, or have sold to local customers (like the headline-grabbing Renault and McDonald’s).

According to its most recent research note, “We calculate the GDP hit at less than 1 percent because operational assets will continue in the country.”

Azat Temirkhanov, an analyst at Autostat in Tolyatti, stated that “Russia is still part the market despite sanctions.”

“It’s not the Soviet era when there was an Iron Curtain. We have economic integration. All we need is to rebuild our supply chains.

This is the message that the Russian state loves to spread. However, the doomsday forecasts from the first months of sanctions headlines have slowed slightly.

Image Lada is a ubiquitous brand in Russia, mainly because it’s home-grown and affordable


“So much for your Sanctions”

Russia’s Central Bank has increased its GDP contraction forecasts this year from 4 to 6 percent to 8 to 10%.

International Monetary Fund revised theirs from 8.5% to 6%.

Russia’s economic outlook is not good. It is facing extremely difficult times. It isn’t yet the economic death knell some Western think tanks and Ukraine’s supporters might be predicting.

Tolyatti has been through hard times in the past. We spoke with workers who were unhappy about their wages and the hoped-for return of a five-day work week. Sanctions seemed secondary.

“You and your sanctions,” stated Yuri Mukhoed who has been furloughed since two years and who has worked for Avtovaz in the 1990s.

“It is futile to impose sanctions on Russia. Russia is self-sufficient.

“We wanted to unify the world and be kind. But now, it seems that nobody needs us. If you don’t want to be here, then this is the end of Europe. They knew it was coming. They knew it was coming. They can survive without firewood. They still need Russia. They still need Russia.

Image People enjoy Victory Park, which was built by Avtovaz

Tolyatti, Russia’s heartbeat and worst-hit sector in terms of sanctions, is undoubtedly Tolyatti.

Victory Park is a new urban development that Avtovaz has funded to mark its 50th anniversary. Here, teens play basketball and ping pong to Russian rap music.

Couples salsa dance in another corner. After another hot, baking day, the evening sun sets.

You could think that Russians are enjoying their summer and forget there is a war going on underneath.

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