The Prancing Deer (Part II)
History of the Russian automobile from its emergence from the Second World War to its current state. Second part of a two-post series on the Russian automobile.
Read Part 1 to learn about the Russian automobile through its foundation, revolution, and the early Soviet Union.
In the early morning of May 9, 1945, the instrument of surrender was enforced, formally ending the war in Europe and compelling the Third Reich’s capitulation to the Allies. The most destructive war in European history had come to an end, costing between thirty and thirty-five million civilian lives, not to mention the millions of brave allied service members who died to liberate Europe from the German Reich. 46 days later, the largest parade ever held in the Kremlin began, with 40,000 soldiers and nearly two thousand military vehicles celebrating the monumental feat achieved over years of brutal war. As the celebrations progressed, motorcycle-mounted soldiers drove as part of the mobile contingent. They were riding the M-72 motorcycle, a near-perfect copy of the lend-leased BMW R71. It was a minor symbol of the Soviet victory, appearing on some postage marks, and it was an early symbol of how Lend-Lease shaped the recovering Soviet automotive industry.
The Soviet Union had experienced the most significant casualties in Europe, having lost between 24 and 27 million of its population, with a disproportionate majority being civilian lives. Nazi Germany’s campaign in the Soviet Union had destroyed 32,000 factories, 1,700 towns and cities, 70,000 villages, 6 million homes, 82,000 schools, and over 40,000 hospitals.1 The invaders had destroyed approximately 30% of the national wealth of the U.S.S.R. and had deliberately devastated the agriculturally rich regions in Ukraine, Belarus, and Eastern Russia.
By the war's end, reconstruction was already well under way in the Soviet Union and parts of the future Warsaw Pact. The Cherkasova volunteer movement began after the Battle of Stalingrad, when Aleksandra M. Cherkasova led a group of women to post a call for volunteer-led reconstruction efforts in a local newspaper.
“The Cherkasova movement, meanwhile, was capable of rapidly outpacing official proposals, and the city’s authorities were hard-pressed to obstruct their efforts. Often, the city administration found itself reacting to, rather than directing, the movement, trying desperately to assert some influence over the brigades through Party levers.”
- Matthew Cotton, Jordan Center for the Advance Study of Russia2
In 1945, over a thousand volunteer brigades were active in Stalingrad alone, and the movement had spread all over the nation.
The authorities also invested heavily in domestic reconstruction efforts as the Red Army advanced further West, and the industrial cities of Russia and Ukraine were reasonably prepared for demobilization and reparations. As part of German war reparations, the Soviets disassembled and shipped entire automotive and military vehicle factories back to the USSR.
By 1946, the Soviet Union produced its first post-war automobile — the GAZ-M20 Pobeda (Victory). The Pobeda was based on a previous design from 1940 and work on preparing it for post-war civilian usage began in 1943 at the Gorky Car Plant (GAZ) in Soviet Russia. The Pobeda was more modern and originally designed than pre-war models, paired with a fresh style previously foreign to Soviet drivers.
Unlike its cousin, the Moskvich-400 (Muscovite-400) was almost entirely a copy of a German model previously produced at the Opel Kadett factory, which was one of the plants moved in their near totality to the Soviet Union.
While both the Moskvich and Pobeda were icons of the Soviet victory and post-war reality, the Soviet government prioritized truck production to advance its industrialization and issued Resolution No. 9905 to plan the future development of the automotive industry.
By 1947, civilian automobile production had recovered from its low point during the war. Still, it would take until 1949 for the Soviet economy to produce more vehicles than in 1940, immediately before Operation Barbarossa.3 In 1950, the USSR produced 363,000 cars, significantly exceeding its pre-war highs, and a program for exporting Soviet automobiles to communist allies was slowly growing since its founding in 1948.
Stalin’s death in 1953 marked a transition into a period of prosperity and expansion for the industry. After Stalin’s industrialization initiatives had finally borne fruit, the entire Soviet Union experienced an industrial boom. By 1958, annual car production had jumped to over 600,000, and the 1950s saw the first exports of domestic Soviet models to Western Europe.
GAZ and ZIS/ZIL, part of pre-war partnerships with the West, significantly expanded their production of automobiles and new postwar designs. GAZ introduced the GAZ-21 Volga in 1956, giving birth to the Volga brand. The model would be the most luxurious car ever sold in high volumes within the Soviet market, designed for officials and taxi fleets. Two years later, Moskvitch released an upgraded 407 series, which would become the first Soviet car to be exported to Western European nations in large numbers.
“Additional plant construction after World War II supported an average annual increase in vehicle production… of almost 15 percent between 1946 and 1958. Much of this extensive growth was sustained by… import of Western technology... The ZIL, Gor'kiy, and Yaroslavl' plants were partly or totally built by Western firms.”
- Declassified CIA Report on Soviet Automotive Industry, 19864
By the 1960s, passenger cars started taking a more integral role as symbols of socialist progress and achievement and were becoming less sidelined for truck production. The ZAZ factory in the Ukrainian SSR produced the ZAZ-965/A microcar, which gained a solid reputation as an affordable and straightforward option for disabled war veterans to regain mobility. The Soviet leadership under Kruschev increasingly began valuing personal cars as a component of consumer welfare and a necessary propaganda tool.
This perspective led to an even more significant expansion of automobile manufacturers. Belarus, Georgia, and Ukraine all received new factories tailored to trucks and buses. The LiAZ factory in Russia and the LAZ factory in Ukraine produced thousands of buses that would define an era of public transportation. The LiAZ-158 (also produced as the ZiL-158) became the staple city bus of the 1960s, and around 60,000 were built. The next model, the LiAZ-677, began production in 1967 and would see nearly 200,000 finished models.
The greatest evolution, however, occurred in 1966, when Soviet planners decided to address the chronic shortage of family cars by building an entirely new giant car plant in collaboration with a Western manufacturer. After a long competition, the Soviets chose Italy’s FIAT, particularly its Fiat 124 model. Production began in 1971 with a heavily modified Fiat 124 rebranded as the Lada 2101 Zhiguli, the founding car of the Lada brand. The plant produced 300,000 vehicles in the first year, revolutionizing Soviet families’ access to passenger cars. By 1972, the plant reached its annual capacity production of 600,000 automobiles.56 It quickly became the largest car plant in Europe.
Thanks to the newly-built AvtoVAZ and other investments through the sixties, Soviet production jumped to 2,000,000 units heading into the 70s.4 The CIA report on the Soviet car industry mentions how the USSR avoided internal competition by allocating each major factory to a specific niche, roughly along these lines:
GAZ in Gorky produced medium trucks and Volga passenger cars.
ZiL in Moscow produced heavy trucks and armored limousines, some of the most prestigious vehicles in the Soviet Union, designated for officials and military parades.
Moskvitch AZLK in Moscow produced compact cars made affordable for middle-class Soviet families.
AvtoVAZ in Tolyatti, RSFSR, produced Lada passenger cars.
UAZ in Ulyanosvk, RSFSR, produced utility vehicles and vans.
KamAZ (Russia), MAZ (Belarus), KrAZ (Ukraine), UralAZ (Russia), and BelAZ (Belarus) were all primarily truck makers. Depending on plant age, they were divided between industrial heavy diesel trucks and construction vehicles.
LiAZ and PAZ were focused on city and highway buses.
As the USSR entered the 1970s, vehicle exports became more important in economic and diplomatic policy. By the late 1970s, about 15% of Soviet vehicle output was exported, chiefly to its Eastern Bloc allies and developing nations.4 Of these, the vast majority were passenger cars, as trucks remained a priority for industrial output and were mainly used domestically.
Stagnation in the Brezhnev Era
By the mid-1970s, the Soviet auto industry had grown dramatically in scale and was unrecognizable from the few experimental factories of the early Soviet Union. However, it had begun to fall behind in technological advancement as Western models became more intricate. Once Kruschev was ousted and replaced with Leonid Brezhnev, a widely-dubbed “Era of Stagnation” began and intensified the lack of innovation within the auto industry.
The CIA report, produced just after the so-called Brezhnevian Stagnation ended with Mikhail Gorbachev's ascension, focuses intensely on this period. Brezhnev’s rule would see the first decline in automotive production since the German invasion, and growth crashed down to historic lows, at times less than one percent. These drops occurred even as demand within the Soviet economy soared.
“Consequently, during 1976-85 output rose only slightly, from 2 million to 2.3 million vehicles — an average annual growth rate of only 1.5 percent. Truck production declined in 1982 and car production fell in 1981-82”
- Declassified CIA Report on Soviet Automotive Industry, 1986 4
After the AvtoVAZ (largest passenger car plant in Europe) and KamAZ (largest truck plant in Europe) were completed in the early 1970s, there was little motivation to innovate. Central planners stuck to proven designs and were content with meeting pre-existing quotas rather than pioneering.
The most concerning development for the industry was the failure to launch a proper generation of passenger cars in the late 70s. While all the primary brands created newer models, they acted as facelifts of the previous generation and failed to make advances comparative to their foreign counterparts. It was especially during this period that Soviet automobiles became increasingly of poor quality.
By the 1980s, this problem was even further exacerbated. The Lada 2107 (an upgraded 2101) featured many parts identical to the original. GAZ attempted to refresh the Volga series with the GAZ-3102 but failed to innovate under the hood and remained an underpowered and backward design compared to foreign models. Moskvitch attempted a more modern approach with the Moskvitch-2141 “Aleko,” inspired directly by Western designs, but quality control and economic issues culminated in small sale figures.
Late Soviet innovation accomplished several notable achievements despite the institutional barriers holding it down. AvtoVAZ launched the Lada Samara (VAZ-2108) with the help of Porsche engineers, representing a massive leap in development with numerous Western advancements incorporated. Truck manufacturers continued to operate at a respectable rate, with modern innovations gradually entering the industry.
Still, compared to Western manufacturers or the rising Japanese auto industry, Soviet vehicles in the ’80s were antiquated. As the CIA report noted, by the mid-1980s, Soviet trucks were roughly equivalent to Western trucks of the mid-1970s in design, and manufacturing productivity was abysmal by comparison. After its stagnation, domestic production never satisfied more than 45% of potential demand7, and the lack of imports created the infamous phenomenon of long wait times for outdated products.
During his short reign, Gorbachev acknowledged issues in production, quality, and the Soviet economy. However, with the state of the economy and little time to implement changes, very little occurred to stop the decline of the Soviet automotive industry, which would soon face its final challenge.
The Collapse of the Soviet Union
The dissolution of the Soviet Union in 1991 triggered an economic catastrophe that devastated all post-Soviet economies and sectors, with the auto industry being hit especially hard. Factories lost their guaranteed state orders and funding virtually overnight, plummeting production and unleashing Western competition. By 1993, output crashed by 14% while half the cars sold in the new Russian Federation were foreign. As savings were wiped out by economic catastrophe, default, and hyperinflation, car demand collapsed, and the major Soviet-era plants were bought up by oligarchs.
AvtoVAZ, the previous highlight of Soviet automotive prestige and the socialist car project, was devastated. Production fell from approximately 700,000 vehicles in 1990 to below 200,000 in the middle of the decade. Moskvitch (AZLK) went bankrupt by 1994, and ZIL collapsed to an absolute minimum production level. The collapse or downscaling of nearly every link in the Soviet economy meant the plants that could continue production ran out of domestic materials to build their cars.
“As Vassil Stavrev, an analyst for Global Insight notes, “Automotive alloys must be exported, refined and imported. Even Russian steel has too many impurities and surface defects to be usable for painted panels.” In fact only 5% of 300 first tier auto suppliers can meet Western quality standards, a fact acknowledged by the Russian Ministry of Industry.”
- The Russian Automotive Industry and Foreign Direct Investment6
The only automakers that survived the 90s did so through sharp pivots to military or niche markets. GAZ introduced the GAZelle, a light mininbus that became a staple of Russia’s young private businesses needing transport. The model kept the factory afloat even as it distanced itself from the increasingly unprofitable Volga sedans. UAZ pivoted to a reduced production of jeeps designated for niche applications, repackaging its aged UAZ-469. KamAZ was the victim of a devastating fire at its engine facility in 1993. However, it was kept alive through a government bail-out and Western injection, limping through the rest of the 90s by selling its reduced production to the Russian military.
Model exports to the West had collapsed due to new regulations and the state of the economy, erasing a much-needed market and source of complex, stable currency for the Russian economy. Lada, the primary automobile export, lost its last notable Western market, the UK, in 1997 due to a new wave of regulations.
That same year, the industry began showing its first signs of life — the first production increase since the collapse. New protectionist measures gave the industry breathing room from the relentless import of cheaper and more intricate Western models, and local industry had begun to recover. These accomplishments were, however, wiped out by the 1998 Russian financial crisis, which managed to halt even Western investments. The Russian industry that emerged in 2000 was incomparable to its Soviet predecessor, and the 90s represented another lost decade in growth and technological innovation.
The 2000s Renaissance
Russia’s economic revival in the 2000s provided a lifeline to its automotive sector. Car sales boomed as incomes rose, and the government aggressively courted foreign automakers to rebuild the industry. In 2005, the Russian government adopted the “industrial assembly” program8, allowing Western companies that built their automobiles domestically within Russia to import foreign parts at reduced duties. Paired with other incentives, virtually every major global automaker had established some production in Russia by the early 2010s, either through joint-venture or direct investment in their own factories.
AvtoVAZ was partially acquired by France’s Renault-Nissan through a state-brokered deal in 2008, bringing much-needed cash and engineering experience to the behemoth factory. Throughout the 2010s, Renault increased its stake to control the factory and modernized Lada’s lineup of vehicles with the Lada XRAY and Lada Vesta. By 2018, this partnership allowed AvtoVAZ, once the single biggest producer of automobiles on the continent, to regain the top spot in domestic sales from foreign-branded cars.
American auto giants made early moves to penetrate the market. In 2001, General Motors (GM) set up a joint venture with AvtoVAZ to produce the Chevrolet Niva, a modernized variant of Lada’s 1977 Niva. Chevrolet continued expanding in the Russian market, setting up its own assembly plant in St. Petersburg to produce the Chevy Cruze and Opel Astra for Russian consumption. Ford became the first Western carmaker to build a standalone factory in Russia after the collapse of the Soviet Union, opening up a factory in Vsevolozhsk (St. Petersburg) in 2002 to produce the Ford Focus, which would become immensely popular on the Russian market.
European and Asian automakers also entered the Russian market under the industrial assembly program, with the Volkswagen Group opening a large plant in Kaluga in 2007 to produce VW and Škoda vehicles. Toyata built a factory in St. Petersburg the same year for Camry while Hyundai-Kia opened a massive factory in St. Petersburg in 2010. By the mid-2010s, the Hyundai-Kia plant was one of the biggest producers in Russia, with a reported annual production capacity of 150,000 cars.
With numerous other automakers joining in and domestic oligarchs starting new products, the market reached new heights. By 2012, Russia produced over 2,000,000 vehicles annually for the first time since the Soviet Union. The specter of foreign competition never disappeared, with hundreds of thousands of imported models still needed to fulfill the 2.65 million buy orders in 2011. Still, the industry retook a proud place within the Russian economy, though with a Westernized character. Foreign models, mainly produced domestically within Russia, accounted for over half of sales within the Russian market and dominated showrooms. Lada was the primary Soviet holdout and maintained a strong position within the entry-level market, with the Lada Granta keeping the brand at #1 in unit sales.
In 2014, Russia’s car market peaked around 2.5 million new sales (and production was close behind). The country seemed on track to perhaps become Europe’s largest car market.
Sanctions, Isolation, and Downturn
The sanctions accompanying the annexation of Crimea in 2014, paired with a crash in oil prices, prematurely ended the Russian economic miracle, which had just recovered from the exceptionally hard-hitting 2008 crisis. Panic, capital flight, and hesitancy in foreign investment resulted in the Russian GDP declining for the first time since the international financial crisis seven years prior and stunted Russia’s growth for the rest of the 2010s.
While Western sanctions were relatively limited for the auto sector, they heralded an era of state-mandated caution. The Russian government increasingly distanced itself from the successful industrial assembly program and began promoting “import substitution,” urging domestic firms to produce their domestic alternatives for imported parts. While the policy saw some success in encouraging local electronic and software production domestically, numerous parts were still sourced from outside the federation.
Meanwhile, Chinese automakers sensed an opportunity in the sudden Western retreat from the nation and began greatly expanding their investments and dealerships within the country. Geely, Chery, and Haval (Great Wall) led the charge, but their market share would remain modest for as long as Western brands didn’t actively flee the market.
Then, on February 24th, 2022, Russia began a full-scale invasion of Ukraine. Overnight, an exodus of foreign companies dealt a shock far greater than 2014. Within months, nearly all Western and Japanese automakers halted their Russian operations. They stopped supplying parts, with factories running out of materials to produce the intricate, Western-engineered machines that kept the Russian automotive market afloat. The effect on output was catastrophic: Russia’s car production in 2022 fell by 67% year-on-year to just 450,000 passenger cars – the lowest level since at least the early 1990s.
AvtoVAZ partially halted production after Renault pulled their partnership and sold its majority stake to the Russian government for 1 ruble, effectively nationalizing the company. Nissan similarly left, handing over its St. Petersburg plant for 1 euro in October 2022. Toyota closed its St. Petersburg factory, Mercedes-Benz sold off its Moscow-region assembly plant to a local investor, and Volkswagen halted production at Kaluga. By the end of 2022, of the over 60 foreign automakers that had grown operations in Russia before the war, only 11 remained — essentially all Chinese.9
Amid the historic exodus, the government moved to resurrect Soviet-era names. The idle Renault Moscow plant was transferred to the city, which revived the historic “Moskvich” brand and began assembly of the Moskvich 3, a rebranded Chinese JAC JS4. While touted as an achievement of de-westernization and import substitution, it was essentially an existing Chinese design with minimal changes.
Following the beginning of the war, Chinese manufacturers became the lifeline of the Russian auto market, the absence of Western brands skyrocketing their market shares. Unlike the industrial assembly program, however, many of these automobiles were imported from China rather than produced domestically. Even the Chinese automakers were spooked by sanctions, some holding off from delivering certain electronics out of fear of secondary sanctions10 — something that has worn off as the war progressed. Russia’s loss of access to global payment systems presented a significant hurdle.
The new reality was painful for domestic producers. AvtoVAZ was forced to simplify its vehicles to maintain production, releasing “anti-sanction” versions of the Lada Granta without ABS, airbags, or modern software. Production of the Lada Vesta was paused for most of 2022 as the company stockpiled whatever components it could find as the country struggled to substitute Western imports through domestic or Chinese production. The Russian government directed state purchases toward Lada and UAZ to revive demand.
KamAZ, now cut off from Daimler, reverted to producing older truck models and began a complicated process of localizing engine production, turning to Chinese and Iranian suppliers to replace Western-made engines and transmission parts. PAZ and LiAZ likewise scoured for alternative parts for their bus lines, sometimes even scavenging electronic parts from Chinese tourist coaches.
Production began recovering from the extreme lows of 2022, and by the summer of 2023, AvtoVAZ began claiming improved output. Though heavily dependent on Chinese-associated output, the industry was on pace for around 700-800 thousand cars for the year. The war shifted the dynamic of the Russian automotive industry, which had been steadily recovering and growing with Western partnerships. While China may have just overtaken the West’s role in the market, it has done so in a much less favorable character to the Russian economy and from a strong position as the federation struggled to keep its factories running.
Conclusion
In conclusion, the period from 1945 to 2025 has seen the Soviet/Russian automotive industry complete a dramatic and tragic loop, from dramatic expansion under the Soviet state to near-total collapse, followed by recovery and a subsequent return to isolation and decline. The Russian automobile, for its seemingly disgraced and forgotten role, has tracked a dramatic path throughout its history and has greatly outgrown the shoes of the samokatka that began the Russian automotive journey.
Reflecting on the industry's present state, I find its outlook very pessimistic. While the Kremlin is promoting the market, there isn’t any will to expend fiscal and diplomatic capital to separate the market from China, and the Russian state isn’t in a position to make such changes even if it were willing. The war's conclusion and withdrawal of sanctions, which is already a very rosy scenario, may fix some issues. Still, I don’t see Western manufacturers reentering the Russian market in anything similar to the industrial assembly program that drove the market's revival.
It is pretty interesting how the transitions covered in this post contrast with my family’s journey in car ownership before moving to the United States, as my parents owned both a Ford Focus and a Great Wall.
Regarding Russia Tomorrow and this post, I have several reflections. While I’m pleased to follow the schedule, hopefully, the post in April — Evaluating the Success of the Russian Opposition (2000-2025) — is more timely, as publishing this on the last day of March wasn't planned. The second part of Prancing Deer is now, by far, the largest on Russia Tomorrow, at nearly double the size of the first part of Prancing Deer, and is the first article on the blog that exceeds the email limit set by Substack.
Even with this enormous size, there would still be a good argument for further dividing this post in two to focus on Soviet and Russian times individually, and I may revisit the topic later to do it more justice. When I began, I foolishly did not expect such an abundance of material for 1945-2025 (80 years) as for 1898-1945 (47 years). Generally, though, I am very happy with this result and the ability to implement the editing standards set at the start of 2025, and I am excited to start writing the Russian opposition piece.
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Prokofieva, E. Y. (2011). Directions of industry development of the USSR automotive industry in the second half of the 1940s – the end of the 1960s of the 20th century. Scientific Electronic Library ELIBRARY.RU; Penza State Pedagogical University named after V.G. Belinsky. https://www.elibrary.ru/item.asp?id=17241008
Article in Russian; Requires Access to ELibrary
The Soviet Motor Vehicle Industry: Improving Quality and Productivity | CIA Report. (1986, August 1). Secondary Navigation Freedom of Information Act Electronic Reading Room; CIA. https://www.cia.gov/readingroom/document/cia-rdp87t00787r000400530010-4
History of AVTOVAZ Joint Stock Company – FundingUniverse. (2025). FundingUniverse. https://www.fundinguniverse.com/company-histories/avtovaz-joint-stock-company-history/
Salpukas, A. (1970, October 13). Fiat’s Soviet Unit To Profit “little.” The New York Times. https://www.nytimes.com/1970/10/13/archives/fiats-soviet-unit-to-profit-little-but-agnelli-in-detroit-cites.html
Jason, B., Clive, C., & David, M. (2008). The Russian Automotive Industry and Foreign Direct Investment. WebCite; 16th GERPISA International Colloquium. https://www.webcitation.org/5whnMDem9?url=http://www.gerpisa.univ-evry.fr/rencontre/16.rencontre/GERPISAJune2008/Colloquium/Papers/P_Begleyjason_Collisclive_MorrisDavid.pdf
Partsvania, V. (2024, November 4). Sanctions, localisation and the Russian auto components industry – Riddle Russia. Riddle Russia. https://ridl.io/sanctions-localisation-and-the-russian-auto-components-industry/
Aris, B. (2024, January 10). China takes over Russia’s car market. Bne IntelliNews. https://www.intellinews.com/china-takes-over-russia-s-car-market-307122/
Vladislav Vorotnikov. (2024). Russia faces a shortage of Chinese automotive imports as sanctions intensify. Automotive Logistics. https://www.automotivelogistics.media/trade-and-customs/russia-faces-a-shortage-of-chinese-automotive-imports-as-sanctions-intensify/45911.article