Russia was the hottest destination for parallel exports of Chinese cars last year, and now this market has become the most discussed and watched by domestic car manufacturers. Due to the adjustment of Russia's automobile import policy, there have been reports that the scale of parallel imported vehicles in Russia has decreased recently.
A survey shows that in April 2024, the Russian automotive market registered 147000 new passenger cars and light commercial vehicles, of which 11% were parallel imported vehicles. However, in February and March, this data was 16% and 15%, respectively.
This is partly related to a new Russian car import policy that has been implemented since April. This policy means that parallel export or used car export vehicles that were originally transshipped from China through Central Asian countries and then transported to Russia will need to pay various taxes and fees, and will no longer have the advantage of low customs clearance costs.
In the past, China mostly exported vehicles to Russia through ports in Xinjiang and Heilongjiang under the names of parallel exports and second-hand car exports to Central Asia and Russia. Due to the advantage of low customs clearance fees for exports from EAEU countries (Eurasian Economic Union) represented by Kyrgyzstan to Russia, a large number of car dealers choose to transport their vehicles to Central Asian countries for transit before shipping to Russia. These vehicles are called "low clearance vehicles".
Many Russians and dealers also choose to purchase cars in Kyrgyzstan, making its capital city Bishkek an important hub for automobile transportation. According to national statistical data from Kyrgyzstan, the number of imported cars has surged from 13000 to 184800 from 2021 to 2023, with a large number of cars entering Russia through Kyrgyzstan.
After the implementation of Russian Federation Government Decree No. 152, these low clearance vehicles will no longer be able to enter Russia. This policy stipulates that from April 1, 2024, all costs saved from customs clearance of cars entering Russia from Kyrgyzstan, Kazakhstan, Armenia, or Belarus must be compensated, including tariffs, value-added tax, and consumption tax.
Interface News learned that the above method is at least 20% lower in customs clearance taxes and fees compared to direct exports to Russia. After the implementation of the new policy, car dealers can still enter Russia through transit in Kyrgyzstan, but due to cost considerations, they may choose to ship directly from China to Russia.
Before the official implementation of this policy, some domestic export car manufacturers had already begun to reduce domestic shipments or had already shipped a large number of vehicles to Russia ahead of schedule. After the implementation of the new policy, car dealers are generally in a wait-and-see attitude. Currently, there are some stranded vehicles at local ports, but the overall scale is not large, and the brands are mostly Geely, Ideal, Chevrolet, Hyundai, etc.
Gao Lei, the marketing director of Jiangsu Shiji Automotive Overseas Business Unit, told Jiemian News that his company had already sent all the cars to Russia before the policy was implemented in April. "The new customs clearance tax has not been determined yet, and currently the stranded vehicles are waiting for the confirmation to calculate the cost before making the next plan. If the cost is too high, they will face losses if transported over
If stranded vehicles do not enter the Russian market, they need to find other ways to sell, such as direct distribution in Central Adam. What is more certain is that in the future, Chinese parallel exports of cars to Russia will be directly sent to local Russia through domestic ports, and transit is no longer a cost-effective option.
The industry generally believes that the policy aims to regulate the Russian imported car market, which may lead to an increase in the cost of importing some cars. For Chinese automobile parallel export car manufacturers, policy adjustments mean a reduction in profit margins for the transit export from Central Asia to Russia, and exports to Russia will also slow down in the short term due to observation. In addition, the new policy has put forward clearer qualification requirements (OTTC certification) for export car dealers, which will eliminate some individual car dealers and small-scale car dealers.
Another viewpoint is that this move is beneficial for Chinese car manufacturers to further expand their exports of cars to Russia. After European and American car brands withdrew from the Russian market, Chinese car brands have achieved rapid growth in the local Russian market in recent years. Data shows that China will export 910000 cars to Russia in 2023, a year-on-year increase of 459%.
