EXCLUSIVE: Russian car market may be left without Chinese cars
By Asif Aydinli
"Currently, in Russia, there are significant difficulties in making payments with Chinese partners. There are no clear solutions or specific timelines for resolving this issue. As a result, it is impossible to purchase Chinese spare parts and deliver them to Russia because they cannot be paid for. The same situation applies to cars and many other goods," said Alexey Podschekoldin, President of the Russian Automobile Dealers Association, in an exclusive interview with News.Az.
"Now the situation has become even more complicated. One local solution to this problem is using intermediary firms for transfers, which are emerging at an incredible speed in various countries. However, it is important to understand that such companies charge a commission of at least 5-10% of the transfer amount. As a result, this leads to an increase in the prices of new cars. Additionally, there is a high risk of encountering fraud," Podschekoldin noted.
He also emphasized that the likelihood of Chinese cars disappearing from the Russian market is high if it becomes impossible to acquire them. "Consequently, there will be no talk of price reductions in the secondary market either," he added.
To solve the payment problem, Podschekoldin believes it is necessary to actively implement new payment systems already available for transactions between Russia and China, as well as to open branches of Chinese banks in Russia and Russian banks in China. "If this is not done, the number of new cars on the market will decrease, and they will become more expensive," Podschekoldin is convinced.
It should be noted that by the end of 2023, the share of Chinese cars in the Russian new car market reached 61%, almost double the 37% in 2022. As of January 1, 2024, there were 1.45 million cars from China registered in Russia. The most frequently seen models on Russian roads are from the Chery brand, which has been present in the country for 18 years.
Among Chinese cars registered in Russia, Chery holds a 26% share — there are 375.6 thousand cars of this brand. Geely ranks second with 273.4 thousand cars, and Haval ranks third with 215.1 thousand cars. The top five also include Lifan (152.1 thousand cars) and Great Wall (124.4 thousand cars). The figures for other Chinese brands are below 100 thousand cars.
Due to Western sanctions, there are almost no alternatives to Chinese cars in Russia, except for some Korean models. By August 2022, a few months after the sanctions were introduced, cars from China had flooded the Russian market. Analysts expect that the expansion of Chinese brands will continue, and by 2025, every third car sold in Russia will be Chinese. According to forecasts, the Russian car market will continue to grow and may reach 1.8 million units by 2028.
Considering that China holds 76% of the world's battery production capacity and freely purchases raw materials for their production, it can produce electric cars much cheaper and displace competitors by undercutting prices. Given that the EU intends to ban gasoline-powered cars by 2035, China will gain another accessible market to enter easily, analysts believe. The European Union is actively resisting China's automotive expansion, while the Chinese auto industry uses Russia as a springboard to enter global markets and compete with European and American brands.
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