Auto & Transportation

Under the influence of geopolitical conflict, the EU launched a fourth round of sanctions against Russia, including a ban on the export of high-end automobiles to Russia. In the face of multinational auto brands reducing their exports to the Russian market, the Russian Federation Minister of Industry and Trade Denis Manturov recently stated publicly that the Russian Ministry of Industry and Trade is discussing with Chinese manufacturers the possibility of seeking alternatives. Regarding the opportunities and development of Chinese brand cars in the Russian market under the new international situation, Andrei Olkhovsky, general manager of GC Avtodom Group, a Russian car sales and service provider, said recently that the sanctions imposed by Western countries have been greatly reduced The number of cars exported to Russia, the structure of the Russian car market is changing rapidly. Russia and China maintain stable economic and trade ties. The two sides have great potential for cooperation in the field of auto trade, and are now ushering in special development opportunities.

"The current auto market and most of Russia's economic sectors are going through difficult times. According to data released by the European Business Association, in May this year, sales of new cars in Russia fell by 83.5% year-on-year. It fell by 52% in five months." According to Andrei Olkhovsky, the supply of auto products to Russia through official channels has almost stopped due to Western sanctions, which has caused the Russian auto market to be in trouble. "Currently, only Chinese and some Korean automakers can continue to deliver. New cars of European brands are mainly present at some dealers, but the inventory can only meet the demand for 4-6 months."

The sudden geopolitical conflict has indeed had a big impact on the growing Russian auto market. According to the public data of relevant research institutions, the cumulative sales volume of the Russian auto market in 2021 will be 1.667 million units, a year-on-year increase of 4%. Among them, the volume of the Russian high-end luxury car market is about 150,000 units, with BMW and Mercedes-Benz accounting for nearly 70%. market share. A European analysis agency predicts that the Russian auto market has obvious growth potential in recent years, especially the luxury car market is on the rise, and the demand has surged.

Founded in December 1992, GC Avtodom Group is one of the largest automobile sales and service providers in Russia. Its business mainly focuses on the sales and service of high-end cars and luxury cars. It has been established as a number of European car brands in Russia. reliable partner. GC Avtodom is also very interested in providing more support for Chinese cars to develop the Russian market. Andrei Olikhovsky said: "Although there are many uncertainties in the future of the Russian auto market, we are still willing to dialogue with more partners and strive to become their authorized dealers through economic negotiations. At present, we are interested in Chinese brands include Hongqi, NIO, BYD and SAIC, among others.”

According to Andrei Olikhovsky, compared to German and Korean models, although Chinese brand cars have been widely favored in the Russian market in recent years, their market share is not large. German, Japanese and Korean cars have long occupied market shares due to their large production capacity in Russia and high brand recognition.

However, this status quo is being disrupted by ongoing geopolitical conflict. Sales of Chinese cars in Russia saw the smallest decline, down 64.6% compared to May 2021, according to data from the European Business Association in May. This increased the Chinese automaker's share of the Russian market to 13 percent.

"Under the current situation, several American, European and Japanese car brands may withdraw from the Russian market, which may lead to a further increase in the share of Chinese brand cars in the Russian market. The number of cooperative dealers will also increase accordingly. This not only means that from Chinese car companies will have a stronger position in the Russian market, which means that Russians will also see some new brands from China," said Andrei Olikhovsky.

According to data released by the Russian Automobile Market Research Corporation, as of April 2022, there were 3,164 car dealers in Russia, an increase of 84 compared with the previous year, mainly due to the expansion of the Chinese brand dealer network. For example, Chery opened 24 dealerships, EXEED opened 18 dealerships, and Haval opened 15 dealerships.

In addition, according to a research report by the Russian analysis agency Autostat, the number of Chinese automakers and dealers currently operating in the Russian Federation is 723. Among them, more than a quarter (about 194 dealer centers) are located in the Central Federal District of Russia, with the largest number; followed by the Volga Federal District, with 169 dealers; 80-90 dealers are located in the northwest, south, Ural and Four other regions in Siberia; least in the North Caucasus and Far East.

"Currently, the leading Chinese car companies in the Russian market are Haval, Chery, Geely and Changan, but in the long run, only through the localization of production can Chinese brands expand their market advantages and maintain their leading position. Typical representatives are Haval and Geely," said Andrei Olkhovsky.

According to the public information released by the Haval Representative Office in Russia, the Haval factory in Uzlovaya Industrial Park, Tula Region, Russia opened in early June 2019. In 2021, Haval's sales in Russia increased by 2.2 times to 39,100 units. Market share increased from 1.1% to 2.3%. The factory that Geely participated in the construction of the Minsk region of Belarus is an all-bulk factory, which mainly supplies the Russian market.

Andrei Olikhovsky added that Chinese cars are currently gaining popularity in Russia, not only because of their better practicality compared to other car brands, but also because of the technology that the cars themselves have carried out in recent years. change related. "China's auto industry is changing rapidly, and the original high-quality design and advanced technology of auto frames and complete sets of equipment have gradually matured. Especially in terms of comfort and safety, Chinese brand cars still have many advantages." Andre Oli Hofsky said.