Financial communication APP learned that, Cui Dongshu, Secretary General of the Passenger Vehicle Association, stated that with the soaring oil prices, in 2008, Russia's automotive sales reached nearly 3 million units. The global economic crisis in 2008 interrupted the continuous growth trend of the Russian automobile market, and the annual sales volume peaked at 2.928 million units. After the Crimea crisis in 2014, the annual sales volume dropped from the previous 2.5 million units to 1.5 million units. Following the conflict between Russia and Ukraine in 2022, the annual sales volume hit a low of 0.687 million units in the same year. Russia's automotive sales rebounded to 1.05 million units in 2023. In the period from January to August 2024, the sales volume in Russia reached 0.99 million units, a year-on-year increase of 64%. According to this trend, it is expected to reach a scale of 1.4 million units in 2024.

The drastic fluctuations and competitive changes in the Russian automotive market have brought huge market sales and substantial wealth to Chinese independent car manufacturers. This has also provided overseas profit support for independent brands in competing with domestic joint venture car enterprises, achieving strong growth.

1. Annual Trend of the Russian Auto Market

Russia is a long-standing superpower in the world, with strong global advantages in technology and other fields, but its performance in recent years has been relatively weak, especially gradually deteriorating since the beginning of this century.

With the soaring oil prices, Russia's automotive sales reached nearly 3 million units in 2008. The global economic crisis in 2008 interrupted the continuous growth trend of the Russian automotive market, with annual sales peaking at 2.928 million units. After the Crimea crisis in 2014, the annual sales dropped from the previous 2.5 million units to 1.5 million units. Following the conflict between Russia and Ukraine in 2022, the annual sales hit a low of 0.687 million units. Russia's automotive sales rebounded to 1.05 million units in 2023.

In January to August 2024, sales volume in Russia reached 0.99 million units, a 64% year-on-year increase. Based on this trend, it can be determined that the scale should reach 1.4 million units in 2024.

2. Monthly Trends in the Russian Auto Market

The sales of the Russian auto market have shown dramatic fluctuations in recent years. The outbreak of the COVID-19 pandemic in 2020 had a certain impact on the Russian auto market, but it quickly recovered after a decline in March.

In 2021, the Russian auto market overall showed a relatively stable state. In 2022, with the outbreak of the Russo-Ukrainian crisis, the entire Russian auto market entered a phase of sharp decline, with some monthly sales in 2022 reaching around 0.03 million units. The Russian auto market gradually recovered in 2023, reaching around 0.1 million monthly sales, and by 2024, it recovered to around 0.15 million units, with relatively strong performance in recent months.

3. Trends in Russian Market Share

Before the Russo-Ukrainian conflict, the Russian car market was long dominated by foreign capital, with a relatively fragmented landscape. The main competitors in the Russian auto market are European automakers, with German and French European cars performing relatively strong overall. In particular, we see that European cars, including German brands, account for about 60% of the market, showing a relatively strong performance.

Korean automakers have performed relatively stronger than Japanese cars, with Korean cars reaching over 20% market share, while Japanese cars are at around 17%. American cars, on the other hand, have generally performed poorly, with single-digit market share.

Russian domestic car companies have shown relatively weak performance. However, after 2023, many foreign car companies temporarily withdrew, agreeing to sell shares to Russian counterparts, leading to the concept of joint ventures and foreign car companies moving to Russian domestic car companies. At the same time, Iranian cars had some imports after 2022, but experienced a sharp decline in import volume in 2024.

After the Russia-Ukraine conflict, due to sanctions and material shortages, international car companies successively withdrew from the Russian market. Chinese car companies had been gradually rising in the Russian market from 2021 to 2022, especially by 2023, seizing the relatively strong domestic market demand in Russia with insufficient supply. They achieved a market share breakthrough of over 50% and further surpassed 60% in 2024, demonstrating strong growth by Chinese car companies.

4. Trends of International Brands in Russia in 2024

There are currently three ways of importing cars into Russia: natural person import, corporate batch import, and corporate parallel import. Adjustments in parallel import policies benefit official exports by Chinese car companies, while changes in scrap tax policies close off the low-tariff gray channels from neighboring countries. Russia stipulates that cars imported from Eurasian Economic Union (EAEU) countries must pay a 'scrap tax' equivalent to the saved tariff costs, effectively closing those low-tariff gray channels from neighboring countries.

Chinese cars are suitable for corporate batch imports in Russia. Russia prohibits Chinese cars from entering through corporate parallel import channels, effectively preventing unauthorized dealers from engaging in low-price competition, which benefits official exports by Chinese car companies.

Overall, international car brand sales in Russia still maintain relatively high levels, especially Kia, Hyundai, Toyota, and other Japanese and Korean brands that have monthly sales exceeding 1500 units. BMW and Mercedes-Benz also achieved monthly sales of over 600 units in 2024, showing a relatively good performance. Other international car companies also exhibit certain sales trends.

5. The trend of Russian independent brands.

Due to weaker technology and product strength, Russia's local cars mainly focus on the lower-priced low-end market segment. In 2023, the best-selling car in the Russian automotive market is the Lada Granta, mainly because of its cheap price, meeting the car needs of the Russian people.

Chinese independent car companies rely on strong technological improvements and industry chain advantages, showing relatively strong performance in Russia. Chery has reached a level of monthly sales of over 0.03 million units. Especially, Chery has achieved a good trend of comprehensive development in Russia with localization production, OEM production, and import vehicle combination of multiple brands, achieving a super-strong growth scale and the trend of joint development featuring multiple children and good fighting capabilities.

Great Wall Motors has performed relatively well in Russia, especially the Haval and Tank brands have relatively good performance. The Haval brand has achieved super strong development of small fuel vehicles in the Russian market, with models like Haval First Love showing extremely outstanding performance. Geely's performance in Russia has also achieved super strong growth, with products manufactured through localization OEM production and imported models showing relatively strong performance, especially products like Zeekr showcasing extremely excellent performance. Other Chinese car companies are also strong, with products from BAIC showing relatively strong performance in Russia.

6. The gradual strengthening performance of new energy vehicles in Russia.

Chinese automotive brands occupy the mid-to-high-end market in Russia. Chinese car companies have significant advantages in technology and products, coupled with factors such as tariffs, transportation costs, and dealer commissions, which make Chinese branded cars in Russia priced higher than domestic prices.

The overall performance of the Russian electric vehicle market is good, especially with high-end models such as extended-range plug-in hybrids, replacing the good performance of luxury cars in Europe and the United States.

Outstanding performance in the electric vehicle sector includes brands like NIO (02015), Zeekr, Lantu, which exhibit relatively strong characteristics. Meanwhile, companies like Weltmeister and BYD (01211) also have certain sales performance.

The latest products such as Xiaomi (01810), Tesla (TSLA.US) - the world's strongest in smart connected technology, and international premium models like the Rivian Pickup have also shown good performance. Products like Tesla also have certain sales performance in Russia.

Currently, Chinese car manufacturers have a strong presence in the Russian market, but there is a need to strengthen awareness of future risks. The main risks faced by Chinese car companies in the Russian market are political and economic uncertainty. Specifically, this can be divided into macroeconomic fluctuations and uncertainty in industrial policies. The macroeconomic fluctuations in Russia directly affect the demand in the automotive market, also bringing fluctuations in the ruble exchange rate. Russia's manufacturing industry policies often exhibit traces of trade protectionism, which can have detrimental effects on Chinese car companies investing in Russia when there are projects from Europe and the United States that need encouragement. Against the backdrop of the insufficient competitiveness and structural shortages in the Russian automotive industry, it is necessary to assess changing situations early and preemptively address potential policy risks in the future.