Strike action over a four-day period has been deemed unlikely to pose significant risks by the Central Bank
In the face of plummeting sales and economic hardship, several major automakers in Russia, including AvtoVAZ and the Gorky Automobile Plant (GAZ), have adopted a four-day workweek. This move is a response to declining sales driven by high interest rates, reduced credit access, and competitive pressures.
The number of new light vehicles sold in the first half of the year was 575.5 thousand, a significant drop from the full-year sales of 2023 and a critical benchmark for assessing the performance of the automobile industry in Russia [1][2]. This temporary reduction in demand is a reflection of economic overheating decreasing, according to the deputy governor of the Bank of Russia [1].
AvtoVAZ, Russia’s largest carmaker and maker of the Lada brand, has seen sales forecast to fall by about 25% in 2025, with the Russian passenger car market shrinking by 28% in the first half of the year [1][4]. Sales declines are linked to high key interest rates set by the Central Bank, which make car loans unaffordable, reducing consumer demand for vehicles [1][4][5]. Tightening car loan rules and lack of affordable financing products further restrict buyer access [1][4].
Competition from Chinese carmakers, who now dominate more than 50% of the market, has intensified pricing pressure and market share loss for domestic producers [1][4]. The industry also faces a large inventory glut, with AvtoVAZ reportedly holding nearly 100,000 unsold vehicles, well above the usual inventory levels [5].
Companies like AvtoVAZ plan to implement a four-day workweek from late September 2025 to align production with weaker market demand and limit operational expenses while maintaining employee benefits [1][3][4]. GAZ has already moved to a four-day workweek starting in August 2025 for similar reasons, aiming to balance workloads and preserve jobs [3]. Alongside reduced working days, AvtoVAZ will cut employee wages by at least 20% and eliminate overtime pay, a move that has caused employee unrest and potential resignations [5].
The shift reduces operational costs but impacts worker income and employment conditions. The four-day workweek trend is spreading across the Russian automotive sector, with multiple major firms adopting it amid ongoing economic hardship and sanctions-related challenges [3][5]. This is not the first time AvtoVAZ has reduced workdays; a temporary four-day workweek was also in place for three months in 2022 due to the initial shock from Western sanctions and foreign automaker departures [1][4].
The decision on maintaining or expanding the shortened workweek will depend on ongoing market analysis, credit availability, and interest rate changes [1][4]. This approach reflects broader industry efforts to balance shrinking domestic demand with cost control amidst external economic pressures and increased foreign competition.
Russian dealers expect a decrease in car sales in 2025, with a potential decline ranging from 12% to 25% [6]. The Chelyabinsk Electrometallurgical Plant is also set to transition to a four-day work week starting September 1. The sales data for the first half of the year indicates a potential challenge for the automobile industry's sales targets for the full year [1].
Sources: 1. AutoStat 2. Bank of Russia 3. TASS 4. AvtoVAZ 5. Passport Industrial Consulting LLC 6. Russian dealers
In an attempt to control operational costs and facilitate cost management, multiple major automotive businesses in Russia, such as AvtoVAZ and the Gorky Automobile Plant (GAZ), have transitioned to a four-day workweek to ensure production aligns with decreased market demand. This industry-wide shift, inspired by economic hardship and declining sales, also aims to preserve jobs during the ongoing adversity.
The Russian automobile industry, with key players like AvtoVAZ and dealers, anticipates a potential drop in car sales from 12% to 25% in 2025, signifying a challenging season for these businesses amidst reduced credit access, high interest rates, tougher loan rules, increased foreign competition, and sanctions-related difficulties.
