Russia's two largest car manufacturers report deepening crisis – intelligence

Ukraine's Foreign Intelligence Service stated this on its website, according to Ukrinform.

"Starting June 1, 2026, 'kamaz' is switching to a four-day workweek. The relevant order has been signed, and this is not the first such step – a similar schedule was implemented in the summer of 2025. The repetition of this anti-crisis measure only confirms that the temporary measure has become the new norm," the statement said.

At the end of 2025, the company recorded a loss from sales of $284 million, compared to a profit of $11.3 million a year earlier. In March 2026, the ACRA agency downgraded the company's credit rating from AA(RU) to A(RU), citing declining profitability and worsening debt indicators.

According to the intelligence service, market conditions provide no grounds for recovery: in January–February 2026, sales of heavy trucks in Russia dropped by about 40% year-on-year. High central bank interest rates significantly limit access to loans and leasing, effectively restraining demand for commercial vehicles.

Although KamAZ holds 37% of the market in the heavy vehicle segment over 16 tons, Chinese manufacturers FAW and Sitrak already jointly control 21%. In the medium-duty segment, JAC, Dongfeng, and Foton together account for about 20%, offering cheaper and more technologically attractive models. The company does not expect a profit in 2026, aiming instead to break even.

At the same time, AvtoVAZ is sending employees on corporate leave in May, officially citing production modernization. However, the intelligence service believes the real reason is overstocked warehouses due to weak demand.

In March 2026, despite a 31% increase in Russia's new car market, Lada sales fell by 17.4% — making it the only major manufacturer that did not benefit from the overall growth.

Analysts also note increasing competition from localized Chinese brands such as Haval, Tenet, and Belgee, as well as global manufacturers via parallel imports. According to the intelligence service, Lada lags behind competitors both in price and consumer features.

The intelligence service concludes that high interest rates are suppressing demand, Chinese manufacturers are pushing Russian companies out of the market, and state orders that had supported the industry are gradually being exhausted. Further deterioration is expected in the first half of 2026.

As reported, the decline in industrial production in Russia has accelerated.

Photo: Foreign Intelligence Service