Russia Sidesteps Ukraine Sanctions As Thousands Of Western Cars Enter Via Chinese Intermediaries: Report

Thousands of foreign vehicles, including luxury German models and popular Japanese brands, are reportedly finding their way into Russia through Chinese intermediaries, sidestepping international sanctions and automakers’ pledges to exit the market.

The surge comes after the 2022 Russian invasion of Ukraine, which led Western and Asian governments to restrict high-end and hybrid vehicle sales to Russia.

Dealers in Russia are increasingly relying on informal networks to acquire vehicles, often classifying brand-new cars as "used" to bypass manufacturer controls, according to a Reuters report on Thursday, citing registration data and interviews with five people involved in the trade.

Many of these vehicles are either built in China or routed there after production elsewhere, taking advantage of China's competitive car market and subsidy programs, the report said.

Gray-Market Channels Keep Cars Flowing

China's heavily subsidized automotive sector allows traders to export surplus vehicles profitably. Cars discounted in China often sell at near-new prices in Russia, creating an incentive for a growing web of intermediaries connecting Chinese factories with Russian buyers.

The Russian registration data showed strong demand for German luxury SUVs, including the Mercedes G-Class (OTC:MBGAF) and BMW X1, alongside Japanese models such as Toyota (NYSE:TM) and Mazda (OTC:MZDAY), according to Reuters. Nearly half of foreign-brand vehicles sold in Russia last year were manufactured in or routed through China.

Mercedes, BMW, Toyota and Mazda did not immediately respond to Benzinga’s request for comment.

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