Made in Russia? Chinese language automobiles drive a revival of Russia’s auto factories

Akash Arjun

World Courant

By Gleb Stolyarov and Alexander Marrow

(Reuters) – The relaunch of a basic Soviet-era automobile, the Moskvich, by a state-owned firm in November was celebrated by Moscow’s mayor as exhibiting the resilience of Russia’s auto trade to Western sanctions.

“It is a historic occasion,” Sergei Sobyanin stated because the Moskvich was unveiled at a manufacturing unit the Moscow authorities took from French carmaker Renault final yr for only one rouble ($0.01). “Many individuals thought it was the tip of the Russian automobile trade.”

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However the rebirth of the Moskvich can be an indication of China’s rising sway over an necessary sector of Russia’s financial system.

The automobiles rolling out of the huge Moscow Car Manufacturing facility Moskvich within the south of the Russian capital bear no resemblance to the boxy metallic Moskvich fashions of the Soviet period.

The glossy four-door SUVs featured engine components and fabric from China’s JAC Motors, clearly seen. Two sources, who requested to not be recognized as they aren’t authorised to talk to the media, informed Reuters the Moskvich 3 mannequin is a JAC Sehol X4 assembled in Moscow utilizing kits bought from a Chinese language companion.

Moskvich stated in a press release final month its 3 and 3e fashions are produced utilizing large-unit meeting – the place automobiles are constructed at a producing plant overseas, earlier than being exported and finalised in Russia. The corporate stated it really works with a “overseas companion” however didn’t affirm ties to JAC.

“Manufacturing localisation is regularly rising,” Moskvich informed Reuters, including that it hopes to start out a second manufacturing part later this yr or early in 2024 involving welding and portray on the Moscow plant, incorporating a wider pool of native suppliers with Russian elements.

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JAC, based mostly within the japanese province of Anhui, didn’t reply to requests for remark.

Chinese language carmakers are seizing market share in Russia, capitalising on the departure of Western gamers that used to dominate the market earlier than the invasion of Ukraine, auto trade information exhibits.

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Imported Chinese language automobiles now account for 49% of Russia’s market, reaching 40,000 models in June, in contrast with a pre-war share of simply 7% in June 2021, in response to information from analytics agency Autostat.

It’s a profitable enterprise. Chinese language carmakers’ exports of passenger automobiles to Russia in January-Could 2023 elevated 5.2 occasions year-on-year to nearly $3.6 billion, in response to Chinese language customs statistics, together with exports value nearly $1 billion in April alone.

Past these figures, Chinese language corporations are additionally rising their gross sales in Russia with car meeting at factories vacated by the likes of Renault and Nissan, Reuters discovered.

Reuters spoke to 2 corporations and 4 sources aware of the matter who stated that six factories in Russia that have been previously owned by European, Japanese and U.S. carmakers or assembled their autos at the moment are producing Chinese language fashions or have plans to take action.

General, the six factories have an annual capability of round 600,000 automobiles, Reuters calculations present.

Russia’s Trade and Commerce Ministry didn’t reply to a request for remark.

Vladimir Bespalov, an impartial knowledgeable on the automotive sector, stated the rising presence of Chinese language carmakers advantages Russia, enabling it to restart manufacturing at idled factories and maintain staff employed. President Vladimir Putin stated in 2020 the trade employed about 300,000 individuals.

“Some applied sciences can be transferred, some can be localised, however they are going to be not essentially the most superior applied sciences,” stated Bespalov. “However, contemplating there’s nothing else, that is already rather a lot”.


After a chaotic decade following the collapse of the Soviet Union in 1991, Russia inspired Western carmakers to construct factories. It supplied subsidies to these performing operations reminiscent of stamping, welding and portray domestically, in addition to incentivising them to provide elements in Russia.

By 2021, home manufacturing was working at round 1.4 million passenger automobiles – round half its put in capability. That slumped to only 450,000 final yr – the trade’s worst exhibiting because the collapse of the Soviet Union – as Western corporations withdrew within the wake of the Ukraine conflict.

Domestically-produced automobiles now account for lower than 40% of Russia’s automobile market, the federal government has stated, down from 70-75% earlier than Moscow’s invasion of Ukraine.

“Undoubtedly, the enlargement of Chinese language carmakers on the Russian market will proceed,” stated Andrey Olkhovsky, the top of dealership chain Avtodom. “There are not any options for Russia’s automotive trade.”

Avtodom, which purchased Mercedes-Benz’s subsidiaries in Russia, is in talks with a number of Chinese language automakers about assembling a premium Chinese language automobile on the German carmaker’s previous Moscow manufacturing unit and a companion may very well be introduced by year-end, Olkhovsky stated in an e mail.

It’s a radical change of fortunes for Chinese language carmakers in Russia. Manufacturing of Chinese language autos solely started in Russia in 2019 with the arrival of Chinese language automotive firm Nice Wall Motor.

Gross sales of its Haval automobiles, produced at its Tula manufacturing unit, account for nearly 10% of the Russian market now. Nice Wall declined to remark for this text.

Six of the highest 10 manufacturers by market share in Russia are Chinese language automakers, reminiscent of Haval, Chery and Geely, in response to month-to-month gross sales information for June from Autostat.


Beneath the partnership with Chinese language corporations, much less of the manufacturing at former Western factories is at the moment carried out in Russia, the sources stated.

Russian carmaker Sollers stated in November it had began producing Atlant and Argo vans at its Tatarstan plant round 440 kilometres (273 miles) east of Moscow, which beforehand produced Ford Transit vans.

Sollers didn’t point out a companion. In keeping with one other supply, who requested to not be recognized, JAC can be supplying meeting kits for the business autos.

The supply, who works at a Sollers dealership, stated the Atlant and Argo have been rebranded variations of JAC’s Sunray N25 and N35 fashions: “There are variations, sure. The logos on the steering wheel and hood.” Sollers declined to remark.

Russia’s high carmaker Avtovaz, which bought Nissan’s St Petersburg manufacturing unit in February, has began manufacturing there of its Lada X-Cross 5 mannequin in cooperation with what it calls an “Jap companion”.

A supply near the corporate informed Reuters that China’s FAW Group’s Bestune T77 compact utility car is getting used to provide Lada automobiles there. FAW didn’t reply to Reuters questions. Avtovaz declined to remark. Avtovaz has stated publicly it plans to start localising manufacturing in 2024, utilizing components from suppliers in St Petersburg and the Leningrad area.


As Western corporations withdrew from Russia final yr, Moscow orchestrated the takeover of overseas belongings by state-controlled entities to make sure manufacturing from the important sector would proceed.

The federal government, nonetheless, has largely glossed over China’s vital position within the automobile sector’s restoration from a 59% gross sales plunge final yr, as a substitute heralding the revival of well-known Russian model names.

“Step one is the Moskvich along with Lada,” Trade and Commerce Minister Denis Manturov informed RIA information company final month. “I hope the Volga will comply with them already subsequent yr.”

The central financial institution is likely one of the few state our bodies to acknowledge China’s rising affect.

It famous in a mid-July report that a number of factories in central and northwest Russia that have been idle final yr at the moment are producing “automobiles based mostly on Chinese language fashions … below their very own manufacturers”.

“If previously automobiles from Japan and Europe dominated, then now greater than 70% of imports are from China,” the report stated.

With Russia’s home manufacturing more and more depending on importing meeting kits from China, income are beholden to the yuan alternate price, a supply near one of many factories stated.

“Very first thing within the morning you take a look at the yuan price, as a result of margins and costs depend upon this,” the supply stated. ($1 = 90.5325 roubles)

(Reporting by Gleb Stolyarov; further reporting and writing by Alexander Marrow; further reporting by Zhang Yan in Shanghai; Enhancing by Daniel Flynn)

Made in Russia? Chinese language automobiles drive a revival of Russia’s auto factories

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