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The golden era for exports of new energy vehicles from China to Russia has come to an end as the market has reached saturation. In response, Chinese dealerships have started focusing on exporting used cars.
The Russian automotive market is highly competitive and crowded, leading to significantly slimmer profit margins on new vehicles, according to Wang Xiangyu, CEO of a Chinese auto exporter. Nonetheless, the used car segment remains a growing sector with promising opportunities.
The company has shifted its export strategy so that approximately 70% of its shipments to Russia now consist of used vehicles. Since the latter half of last year, exports of used Chinese cars to Russia have surged, yielding profits of about $1,000 to $1,500 per vehicle. Some rarer models can even bring in profits ranging from roughly CNY 20,000 to CNY 30,000 (around $2,785 to $4,175).
Wang attributes the rising demand for second-hand cars in Russia to declining purchasing power among local consumers. Additionally, he notes that Russia’s lower taxes on used cars compared to new vehicles contribute to this trend.
Chinese car exporters began entering the Russian market in 2022 when major European and American automakers withdrew amid the Russia-Ukraine conflict, creating a significant gap that Chinese companies quickly filled.
Over the past three years, Chinese automakers have seen their market share in Russia rapidly increase—rising from just 5% in 2021 to over 60% in the third quarter of last year, according to data from the China Passenger Car Association.
However, as an increasing number of Chinese dealers entered the Russian market, saturation quickly set in, triggering a price war. Some dealers are now selling vehicles at a loss due to large backlogs of inventory, Wang explained.
Another challenge involves changes in Russian policies. To protect local manufacturers, Russia intensified taxes on imported vehicles last year. Previously, Chinese cars could avoid these tariffs by entering Russia through Central Asian countries, but in April last year, the government enacted new regulations to close this loophole.
These obstacles led to a sharp 59% decline in Chinese vehicle exports to Russia in the first half of this year, totaling 171,000 units—the steepest drop among China’s export markets during this period, according to auto industry website BitAuto.
At the same time, the Russian auto market is shrinking, with new car sales dropping 28% to 607,500 units in the first six months of the year compared to the previous year, based on data from Russia’s Ministry of Industry and Trade.
Meanwhile, imports of used cars by Russia increased slightly—rising 2% to 181,600 units during the same period. The proportion of used vehicles among total imports jumped from 30% to 55%, according to local research firm Autostat.
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