Chinese Imported Auto Brands Exiting Russia Market As Added Value Manufacturing Becomes The New Normal

China’s auto manufacturers have leapt to a 45% Russian market share over the past three years as European manufacturers exited the market and Chinese brands swept in to replace them. However, oversupply and changes in Russia’s import tariffs on vehicles have meant that up to ten Chinese brands may leave the Russian market due to lack of demand

The Russian Automobile Dealers Association has stated that “The number of Chinese automotive brands that has flooded the market has turned out to be higher than market capabilities.” They note that a combination of warehouse overstocking, high lending rates and low consumer activity means that the departure of some brands is inevitable. These will likely include China’s Oting, Kaiyi, SWM, Livan, VGV and MG as the main losers.

According to studies by Gazprombank Autoleasing and AutoBusinessReview, 213 Chinese auto showrooms closed in Q1 2025, with the total in Russia decreasing to 2,700. AutoBusinessReview noted that “The contraction of business of such brands as Bestune (FAW) looks especially noticeable — the loss of 26 showrooms.”

Other reasons for the lack of success of some of the Chinese entrants has been poor maintenance and spare parts capabilities. Russian dealers will refuse to renew contracts with Chinese brands that generate losses, according to Maxim Kadakov Editor-in-chief of Za Rulem, an industry publication.

Nikolai Ivanov, director of the new cars department at the Rolf auto distributor, says that Russian dealers are increasingly deciding to terminate franchises that do not provide economic efficiency. Ivanov says that for distributors, this requires a reduction in the distribution chain costs, including retail representation, suggesting that “As a result, the manufacturer loses the infrastructure base necessary for presence on the market.”

Sergey Udalov, executive director of Avtostat says that Russian dealers are in no hurry to take part in tenders for dealership of Chinese brands: “No-one wants to open a new dealership or take extra cars to the warehouse.”

Andrey Terlyukevich, CEO of AutoSpetsTsentr, says that “Judging by the sales statistics for the first quarter of 2025, the question “Why are you here?” is raised by many brands. For example, Forthing, VGV, MG, Oting, JMC, Livan, whose monthly sales in the country do not exceed several dozen cars.”

At least one brand from China has already left the Russian market – Skywell, whose distribution contract was not renewed. Many of these brands however are moving onto new exports markets such as the UAE.

Renat Tyukteyev, Deputy General Director for New Car Sales at Avilon, says that brands whose sales in three months do not exceed 60-70 new cars have a lower chance of survival. Several brands, mainly in the budget and mid-price segments, may leave the market. “In some cases, we are talking about a specific output of five to seven cars per month per dealership, which does not cover basic costs and leads to financial losses on the part of the dealer,” said Nikolai Ivanov. Brands whose sales in the passenger car segment do not reach 1,000 units per year are at risk.

Well-known brands with a developed dealer network have a better chance of gaining a foothold in the market. Russians increasingly choose them to avoid problems with service, rather than cars of lesser-known brands, even with a more favourable price. At the same time, some brands may not immediately leave the Russian market, despite low sales. “Preserving the image, justifying investments, avoiding responsibility to car dealers or hope for growth in the future – there are many reasons to stay” notes Terlyukevich.

The situation has been further compounded by Russia adapting to an excess importation of Chinese-made cars by imposing tariffs of the equivalent of US$7,500 on all imported cars, more than doubling the rate set in September 2024. The fees will continue rising by 10-20% annually until 2030.

That has meant that Chinese auto brands with longer-term attitudes towards the Russian auto market are now investing in Russia to manufacture and assemble vehicles, to bring the industry in line with the Russian governments industrial policies.