Why has Toyota shut car production in Russia?

Toyota said the company will completely withdraw from manufacturing and has no plans for the sale of business. The new car sales will also cease without imports to Russia.

Automobile giant Toyota has shut its vehicle production permanently at its sole car plant in Russia, with the company spokesperson saying it has no plans to restart in the future. However, Toyota has said it will continue to support its retail network in Vladimir Putin-ruled country and providing service to the existing customers, Bloomberg reported.

The Toyota car sales dropped by 69 per cent in Russia between January and August (Reuters)

Toyota had suspended operations at the plant in Saint Petersburg in March this year along with other carmakers like Nissan and Honda Motors, just days after Putin's forces invaded Ukraine. At that time, the company had retained its workforce and had kept the facility ready to restart production if the situation permitted.

But the company said in a statement that it has not been able to resume normal activities after six months and see no indication that it will be able to restart in the future. Toyota spokesperson Hideaki Homma told Bloomberg that the company will completely withdraw from manufacturing and has no plans for the sale of business. The new car sales will also cease without imports to Russia. The handling of employees will be decided later.

The Russian automobile market collapsed after its forces invaded Ukraine. The deliveries plunged by more than 80 per cent in May and June. The Toyota car sales dropped by 69 per cent in Russia between January and August, AFP quoted the Association of European Businesses.

However, the Russian sales are only a small fraction of the company's global revenues. The Western powers have imposed stringent sanctions on Russia since the beginning of war, severely disrupting the supply chains. The technology and car manufacturing sector were particularly affected.