tl;dr
China's carmakers face a rapidly deteriorating situation in the Russian market, which was once a key export destination but has now seen a sharp decline in sales and imports due to new regulations and high interest rates. The impact is visible in reduced export numbers for major Chinese automakers...
China’s carmakers are watching the Russian market fall apart fast. What started as a goldmine after the Ukraine invasion is now a closed gate. When Western automakers fled, Chinese brands rushed in, seizing showrooms like a clearance sale. But by late 2024, the tables have turned. Moscow’s new “recycling fee” has spiked the cost of basic cars—those with one- or two-liter engines—by over $8,000, with no warning and no mercy. Meanwhile, Russia’s sky-high interest rates have made loans nearly impossible for buyers. The result? A 27% plunge in car sales in just six months. Imports of Chinese cars? They’ve dropped 62% in the same period.
This isn’t just a numbers game—it’s a blow to China’s ambitions. Russia had been a key player in the country’s rise as the world’s largest car exporter in 2023, with nearly 20% of all whole-car exports heading to Moscow. Now, the damage is visible. Geely, one of China’s biggest automakers, saw its export numbers shrink 8% between January and August. Great Wall Motor, once a growth engine, barely held its ground. Chery, the top auto exporter, managed a paltry 11% growth in exports—down from a 25% pace last year. Even BYD, which hasn’t officially operated in Russia, is now aggressively pushing into other markets, doubling its overseas sales as rivals scramble.
But the crisis isn’t limited to Russia. China’s factories are drowning in overcapacity, and a brutal price war at home is forcing automakers to offload vehicles anywhere they can. Russia’s collapse removes one of their few outlets. Worse, other countries are slamming the brakes. Tariffs are rising globally, with regions like the EU and Southeast Asia slapping taxes on Chinese cars to curb the flood. The more China pushes, the more doors close—a bad loop Beijing is clearly aware of.
Meanwhile, geopolitics are heating up. Donald Trump, back from the U.S. Open, hinted at a coming showdown with European leaders in Washington, framing the Russia-Ukraine war as a problem needing urgent resolution. His tone was confident, but his message was clear: the war “would soon be settled.” On the other side of the globe, China’s Xi Jinping will join a virtual BRICS summit to counter Trump’s trade threats. Brazil’s Lula da Silva is using the event to rally emerging markets behind multilateralism, while India’s Modi sends a top official in his place. Trump has already warned that if BRICS pushes to ditch the U.S. dollar, he’ll hit them with 100% tariffs.
As China’s automakers grapple with a collapsing Russian market and a tightening global trade environment, the question looms: Can they pivot fast enough to avoid a repeat of their earlier missteps? Or will the next crisis be waiting in the wings?