Car economy in the crisis: Russia sanctioned Chinese cars

Despite good relationships with Beijing

Russia imposes sanctions against Chinese car manufacturers

China an important trading partner for Russia, but now Moscow imposes sanctions. Experts warn of a drastic decline in car sales.

Russia has taken measures to contain the import of Chinese cars. This could be a challenge for Chinese manufacturers and dealers who are increasingly pushing the Russian market, as the “Financial Times” reports.

Despite the western sanctions against Moscow, China remains a central economic partner in Russia. It delivers goods with a double purpose that can be used both civil and military. The Chinese auto industry in particular recently benefited from the Russian market: in 2023 the export of Chinese vehicles to Russia rose to seven times the previous year. This was favored by the withdrawal of western car brands such as Volkswagen, Toyota and BMW from Russia.

Chinese manufacturers who are confronted with anti-dumping measures in the USA, the EU, Canada, Turkey and Brazil found an important sales market in Russia. In the meantime, Chinese brands make up 63 percent of the Russian car market, while Russian manufacturers only reach 29 percent.

The Russian government reacted with measures to limit imports. In January, Moscow doubled the so-called recycling fee for most cars to $ 7,500. This levy is expected to increase by 10 to 20 percent annually by 2030. In addition, a Chinese truck model was excluded from the sale due to alleged security deficiencies. Russian authorities warned that further security tests could follow.

The new restrictions come at a time when experts predict a decline in car sales in Russia. If the high interest rate level remains, the new car sales in 2025 could collapse by 30 percent, said Maxim Sokolow, CEO of the Russian car manufacturer Avtovaz. In October 2024, the Russian central bank had increased the key interest rate to 21 percent in order to contain the inflation heated by high war expenditure.

Despite the growing economic interdependencies with Russia, Beijing emphasizes that it behaves neutrally in the Ukraine war. China also try to position itself as a mediator in the conflict.