How China Influences Russia’s Auto Economy

The offensive war against Ukraine had extreme economic consequences for the Russian economy. European car manufacturers such as Renault and Volkswagen have also withdrawn from the Russian market, causing production and sales of new cars to fall by 60 percent. But the gap seems to be quickly filled again – by Chinese manufacturers.

Geely, Chery and other Chinese companies increased their market share in Russia to 17 percent (121,800 vehicles) last year. In January 2023, the market share of Chinese brands was already 38 percent, reports the “Spiegel”. VW, Toyota and Hyundai, on the other hand, each lost more than 90 percent in sales. The reason for the strong growth: in 2022, the months before the war were still being counted and imports to Russia had to be increased first.

But part of the truth is also that the new car market has shrunk massively over the past year. In January 2023, 45,000 cars were sold in Russia. That’s about half of what drove out of car dealerships in January 2022.

Not only the Chinese directly benefited from the withdrawal of European manufacturers, but also traditional Russian brands. But even they cannot do without Chinese support.

Example 1: Moscow. The Russian government has revived the old traditional brand. What has been rolling off the line as a Moskvich-3 in the former Renault factory near Moscow since the end of 2022 is no more than a technical twin brother of the Chinese JAC X4. According to news agency Reuters, both the design and the technology come from China. When presenting the model, Russian officials remained silent about it.

The Chinese SUV has a 1.5-liter petrol engine with 150 hp. An electric version with a range of up to 500 kilometers is also available – the Moskvich-3 should also be available as an electric car in the future.

Instead, they emphasized that the new model has ABS as a safety feature. Why was this self-evident feature so emphasized? Because of Western sanctions, Russian car manufacturers had enormous problems equipping their cars with basic technology such as ABS or air conditioning – parts that had come from the West until then. That is why the government even allowed cars without airbags and ABS to be sold.

However, the Chinese clone is not yet successful on the Russian market. By the end of January, only 40 copies had been sold, reports n-tv. One of the reasons: the Moskvich-3 is twice as expensive as the Chinese original, but it hardly differs from it. “A Chinese sign with the inscription ‘Moskvich’ comes on a JAC car made in China,” criticizes Russian economist Dmitry Potapenko.

Example 2: Lada. After Renault sold its majority stake in Russia’s most popular carmaker and pulled out of the market like other European manufacturers, its market share increased from 22 to 28 percent. But the embargoes from the West initially caused a shortage of parts and production stops.

Now satellite images again show a lively production at the Tolyatti factory, reports the “Wirtschaftswoche”. Apparently, the missing parts are now supplied by Chinese companies. And not only parts, but also machines and personnel. In the meantime, the top model Vesta is being produced again, the parts of which were previously missing.

Lada models will also roll off the assembly line at the former Nissan factory near St. Petersburg. According to insiders, it seems only logical that they will also use a technical base from China in the future.