Amid tariff wars, Chinese carmakers are dominating Russian market

Amid the reshaping of the global order, trade and tariff wars seem to have become the norm. While such measures are likely to affect exports of Chinese vehicles to the United States and European Union, Beijing can still rely on Russia – a relatively new and growing market that has become an important destination for Chinese car sales. The EU and US have made no secret of their plans to create barriers to the import of Chinese cars. Last October, the 27-nation bloc increased tariffs on Chinese electric vehicles (EVs) to up to 45.3 per cent. And last month, US President Donald Trump announced a 25 per cent tax on imported cars and car parts. Trump’s tariffs are expected to hit both European and Chinese carmakers but could have a bigger impact on the European car industry given that Beijing sees Russia, rather than the US, as a key market for its cars. Three years after brands from the EU, Japan, South Korea and the US left Russia following its invasion of Ukraine, Chinese manufacturers have become dominant in the Russian market. As a result, Russia has become the biggest importer of Chinese cars. Chinese companies such as Chery Automobile and Geely sold more than a million cars in Russia last year, while dealers have imported so many Chinese vehicles that they are being forced to offer significant discounts, ranging from 150,000 to 1 million roubles (US$1,777-US$11,845). Russian President Vladimir Putin claims the popularity of Chinese cars is not related to the departure of European carmakers but is because China has started making cars that are better and cheaper than European ones. In reality, Russian drivers do not have much choice. They can either buy Russian-made cars or Chinese vehicles, as European cars, which come through parallel import schemes, are very expensive. It is therefore no surprise that a recent survey found half of Russians “generally willing” to buy a Chinese car, with only one in 10 categorically against it. According to Russian statistics, in the first 11 months of last year, 788,655 Chinese cars were sold in Russia, making up nearly 60 per cent of the market. Compared to the same period in 2023, sales of Chinese cars had nearly doubled. Moscow has, however, following the EU and US moves, also imposed higher import duties on Chinese cars. The Russian government requires the full payment of tariffs, value-added taxes and consumption taxes for vehicles that are shipped from China through Central Asian countries before they enter Russia. This has affected prices. Reports suggest that Chinese cars have become three times as expensive in Russia as in China. “No country’s development and prosperity can be achieved through the imposition of tariffs,” said Chinese foreign ministry spokesman Guo Jiakun last week, commenting on Trump’s 25 per cent car import tariffs. The same could be said of Russia, where sales of new passenger cars in February fell 25 per cent year on year. More importantly, dozens of lesser-known Chinese car brands are expected to leave Russia this year. EV sales are also down in Russia, by 63 per cent in the first two months of the year; last year, only 17,800 EVs were sold. But unlike in the US and EU, where tariff policies affect buying decisions over Chinese EVs, in Russia, it is the climate that contributes to low EV demand. While 11.2 million EVs were registered in China last year, there are only 60,000 in Russia, where low temperatures can reduce EV battery charges by up to 40 per cent, making them less viable. That is why, at least for now, China remains focused on exporting conventional vehicles to Russia. The decision by Western, Japanese and South Korean carmakers to leave the Russian market has undoubtedly helped Beijing expand its presence there. After Mitsubishi Motors’ departure from Russia, its former plant in Kaluga city started producing the Chinese Haval M6. Chery has also reportedly started to assemble its cars in Russia using factories vacated by Western carmakers such as Volkswagen and Mercedes-Benz. And China’s Great Wall Motor, which produces sports utility vehicles in Russia under the Haval brand, commissioned a plant last year to make car engines at the Uzlovaya industrial park in Tula. The fact Chinese brands have grown to dominate Russia’s car market has drawn criticism from the country’s business community. According to one expert, Vladimir Mozhenkov, CEO of Mozhenkov Progress Consulting, the Chinese have taken a “rather aggressive business stance” as they are working “from a position of strength”, hoping to dictate their own terms. That is why some Russians hope European, American, Japanese and South Korean manufacturers will return soon. This could radically change the balance of power in the Russian car market as most dealers now selling Chinese cars are likely to want to resume cooperation with other brands. This could increase competition and lead to lower prices. That, however, is unlikely to happen this year, even if Moscow and Kyiv, under Washington’s auspices, reach a ceasefire deal. There are no indications that the West will lift sanctions on Russia any time soon, which suggests Moscow will continue to import a large number of vehicles from China. So while Beijing might feel the impact of car tariffs from the US and EU, the dominance of Chinese carmakers in the Russian market can, to a certain extent, offset any potential losses.

Amid tariff wars, Chinese carmakers are dominating Russian market

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The likes of Geely and Chery have filled the gap left by Western rivals. Even with higher duties now levied by Moscow, Chinese vehicles remain the most popular

The likes of Geely and Chery have filled the gap left by Western rivals. Even with higher duties now levied by Moscow, Chinese vehicles remain the most popular