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In the two weeks since the war between Russia and Ukraine, the Western camp has not directly sent troops to Ukraine to participate in military operations, but has provided support to Ukraine through military assistance and economic sanctions against Russia. According to media reports, Western countries plan to let Russia bear the corresponding cost economically, including freezing the assets of Russian oligarchs and related banks, removing Russia and Belarus from the international settlement system SWIFT, and also imposing an oil embargo on Russia.

The automobile industry is an important part of a country's industry. in the context of global economic integration, automotive products need the joint action of global supply chains in order to reduce production costs and obtain higher profits. The war between Russia and Ukraine has seriously affected this region and related factories, including Volkswagen's factories in Germany and many foreign-funded factories in Russia. Even LADA, a Russian-owned brand, announced that it would stop production from yesterday to the 11th, with 20 per cent of its car parts produced by factories outside Russia. Even if Lada resumes production as planned, it is believed that it will continue to be affected by this in the short term, and it is still possible to stop production again. Thousands of car factory workers in production jobs were affected, receiving a minimum wage during their leave, while those in sales and maintenance jobs continued to work.

The shutdown is mainly caused by the interruption of overseas transportation, the inability to trade due to the closure of SWIFT, and the substantial increase in Russia's foreign procurement costs as a result of changes in the exchange rate of the rouble. In this case, foreign exchange-related commercial companies, including automakers, choose to suspend production and sales to avoid persistent losses.

Lada Automobile, formerly known as the Russian Volga River Automobile Factory AvtoVAZ, was founded in 1966, with an output of 750000 vehicles in 1975. It is the largest car factory in the Soviet Union. Most of it was used for export under the background of the planned economy, and its production and structure were relatively simple and problematic throughout the 1970s and 1980s, and its brands were very popular in the Soviet Union, Eastern European countries and China at that time. On the contrary, Russian car owners have to wait several years to buy home-made cars. With the development of the world economy and politics, except for a few nostalgic car outsiders, Russian-made car brands will hardly enter the consideration of consumers in these overseas markets. Although Lada car models can also find product parameters on China's domestic automobile network, no dealer is selling Russian Lada cars.

More than 90% of Lada's sales are aimed at Russia. Lada accounted for 21% of Russian car sales last year, making it the largest car brand in Russia. Four of the top 10 Russian car sales in 2021 were Lada cars, followed by South Korea.

After the great changes in Eastern Europe, Russia opened some markets to the outside world, and the original advantage of marketization was no longer a series of losses. French carmaker Renault participated in the restructuring of AvtoVAZ and became its controlling shareholder in 2004. Renault entered Russian car production of Lada cars and other Renault brands. Renault's parts are more dependent on overseas supply chains than Lada cars, and 40% of the parts come from overseas. Renault currently owns 68 per cent of AvtoVAZ, while Russian state-owned Rostek holds the remaining 32 per cent, and its CEO has been subject to western sanctions since 2014. Strictly speaking, Lada should be defined as the legal system. Last year, AvtoVAZ sold about 350000 cars, accounting for 12% of Renault's sales, making Russia its second-largest market after France. Contributed 166 million euros to Renault's net profit. If the problem is not solved in the short term, Renault could be seriously affected, with its share price down 35% in the past week.

The Russian economy was already hit by a round of economic sanctions when it sent troops to Crimea in 2014, halving annual car sales from nearly 3 million to 1.4 million, at the same level as it was a decade ago. At present, there are about 46 million passenger cars in Russia, with an average service life of nearly 15 years. The Russian-Ukrainian war may further affect the performance of Russia's domestic car consumption market.

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