Moscow starts raising barriers against Chinese auto exports
Russia is starting to curb its influx of auto imports from China.
As the FT reported Monday:
- In January, Moscow more than doubled so-called "recycling fees" – effectively tariffs – to USD 7,500 for most passenger vehicle imports.
- Those fees will grow 10-20% annually through 2030, dampening demand.
ICYDK: In 2022, sanctions imposed on Russia in response to its Ukraine invasion cut off the country's access to leading auto brands, from Volkswagen to Toyota.
- Since then, Chinese cars have flooded in, taking advantage of Russia's high demand and limited supplies while offsetting the impact of EU and US tariffs.
- Last year, Russia absorbed over 1 million Chinese gas-powered vehicles – roughly 30% of China's total gas-powered vehicle (ICE) exports.
But Moscow has grown concerned that the flood of Chinese vehicles is threatening Russia's domestic automakers.
- Chinese vehicle exports to Russia rose more than sevenfold between 2022 and 2024.
- Chinese brands now hold 63% market share – up from <10% in 2022.
- That's compared to Russian brands' 29% market share.
The tension: China has been a critical economic ally to Russia throughout its invasion of Ukraine.
- But Russia's efforts to curb Chinese imports hardly reflect a "lips and teeth" relationship.
Get smart: Chinese auto exports to Russia will remain strong this year, though growth will slow.
- Russia simply can't produce enough to meet its own demand or source sufficient supply from elsewhere – and rising fees aren't yet high enough to significantly curb imports.
The bigger picture: As fees keep rising, China's exports to Russia will eventually decline.
- Chinese automakers will need to expand sales in other markets to stabilize export growth and soak up the excess supply of Chinese-made ICEs.