Chinese car exports to Russia hit by taxes, consumer uncertainty

Russia is no longer the top export destination for Chinese cars after the nation hiked taxes that affect auto imports and vehicle sales slowed as consumers, perhaps hopeful the conflict in Ukraine may draw to an end, await the return of foreign brands.

China's automobile exports to Russia fell by nearly half year-on-year to 57,592 vehicles in January and February, trailing Mexico, which received 85,997 and the United Arab Emirates at 71,418, data released Wednesday by the China Passenger Car Association show. It's the first time in two years that Russia hasn't been No. 1.

The market for new cars in Russia reached the highest in five years last year, with Chinese marques accounting for the bulk of sales as other international brands pulled out following Russia's invasion of Ukraine in February 2022. Now however, higher import taxes and interest rates have contributed to weaker consumer sentiment in Russia, PCA Secretary General Cui Dongshu said.

Moscow has implemented a "recycling fee" that affects all imported cars starting from last year. The levy will increase progressively through 2030, according to local media reports.

People are speculating whether US President Donald Trump can actually resolve the war, Cui said. If that happens, "foreign manufacturers may return to Russia and start making and selling cars quickly, so Russian consumers are waiting for the return of European or American products."