Russia is attempting to stem the influx of a large number of Chinese cars, which poses a blow to Chinese manufacturers and traders who increasingly rely on shipping to their allies.
According to data from the China Passenger Car Association (CPCA), as Western societies impose waves of sanctions on Russia due to the Russia-Ukraine conflict, Western brands have cut ties with Russia, leading to a sevenfold increase in China’s car exports to Russia last year compared to 2022.
On the other hand, Europe and America have imposed anti-dumping measures on Chinese cars, and countries like Canada, Turkey, and Brazil have also taken similar steps, prompting Chinese car manufacturers to focus more on the Russian market.
“The Chinese cars have completely replaced international brands in the Russian market,” said CPCA Secretary General Cui Dongshu. “If the Russia-Ukraine crisis ends, Chinese car manufacturers will face significantly increased pressure.”
For two consecutive years, Russia has become the largest single overseas market for Chinese cars, with a slowdown in growth rate (a 38% increase last year compared to a significant decrease from a 459% increase in 2023), but the annual export volume reached 1.158 million vehicles, accounting for over 18% of total exports.
According to the China Passenger Car Association, the surge in Chinese car brands has led to a market share in Russia of 63%, while the market share of local Russian brands has dropped to 29%.
Russian authorities have started to fight back. In October 2024, Russia announced a 70%-85% increase in scrap taxes (specific increase rates determined by engine displacement), which will continue to rise by 10%-20% annually starting from January 2025 until 2030. As a result, import costs to Russia will significantly increase.
According to the Financial Times reported on March 10, Gregor Sebastian, an automotive analyst at Rhodium Group, said that Russia, like other countries, is concerned that the influx of cheap Chinese cars will harm the domestic manufacturing industry.
“They hope Chinese carmakers can strengthen local production,” he said. “For a while, they felt they had no choice, but now they realize they have bargaining power.”
A recent survey in Russia also found that three major Chinese truck manufacturers violated safety standards, leading to a ban on the sale of a model in the country. Russian officials have indicated that they may implement new compliance and testing checks on imported vehicles.
Chinese company Chery is the largest Chinese car manufacturer in Russia. According to data from the China Passenger Car Association, in the first three quarters of 2024, Chery sold 430,000 cars in Russia, accounting for 28% of its total sales.
Most of the China-Russia trade passes through the northeastern Chinese border town of Suifenhe. Suifenhe’s exports to Russia increased to nearly 14 billion Chinese yuan (1.9 billion US dollars) last year, five times more than in 2020, making it the most active trade center between China and Russia (excluding oil and gas).
Exporters of cars in Suifenhe say that Russia’s recycling fees have not been widely levied yet.
Mr. Chen from the Chinese High-Speed Car Export Company in Suifenhe, who preferred not to reveal his full name, said that he now sells cars directly to Russian drivers to avoid paying recycling fees.
“Our sales volume is about the same, but the work involved is much more now,” he said. “Before, I would sign contracts for 50 or 100 cars with dealers. Now, it’s one car per contract.”
Cui Dongshu mentioned that in addition to the fees levied by Russia, the extra tariffs imposed by the EU on major electric car manufacturers will pose a severe challenge for Chinese car exports in 2025.