Chinese carmaker Chery, headquartered in Wuhu, has started assembling cars at Russian plants previously utilised by Western firms such as Volkswagen and Mercedes, Reuters reports.

The company accounts for almost a fifth of Russia’s passenger car sales. Anonymous sources, who were not authorized to speak to the media, say Chery imports nearly finished vehicles and completes assembly in three Russian factories.

Upon Russia’s invasion of Ukraine in 2022, there was a mass exodus of Western firms from the country. It left a vacuum that China has been eager to fill, particularly in the auto sector. Chinese producers now make up over half of Russia’s car sales since the war began.

In a public statement, Chery assured that while it supplies and sells passenger cars to the Russian market, it had no plans of building or buying manufacturing plants there. Russia has been facing low output which has led to a government push towards raising domestic production. It plans to raise taxes on imported cars starting in 2025 and raise support for domestically produced vehicles. The move could also incentivize foreign firms to localise production.

The company did not respond to Reuters’ request for comment regarding the assembling work at the Russian factories.

Recently, a Russian industry group explicitly called on Chinese automakers to localise production in order to save costs. Vitaly Mankevich, chairman of the Russia-Asia Union of Industrialists and Entrepreneurs, told Sputnik News that due to rising costs “in a few years, imported cars will become a rarity, and those who are genuinely interested in the Russian market should seriously consider localising production.”

The Russian market accounted for over 19% of China’s auto exports in August with a value of $1.6b, according to China customs data. During 2023, the share of Chinese cars in the Russian market spiked from 17% to 49% according to the auto business unit of Russia’s Otkritie Bank.

The influx of Chinese passenger cars into Russia the first eight months of 2024 was worth $9.15b, compared with a value of $6.8b in the same period last year.

China’s exponential interest in Russia comes amid the EU vote to impose tariffs on the import of Chinese battery electric vehicles. China was quick to retaliate, implicitly targeting France, by imposing anti-dumping measures on EU brandy imports.

"Chinese carmaker operating in Russian plants vacated by Western firms" was originally created and published by Investment Monitor, a GlobalData owned brand.

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