Western economic sanctions to sustain surge in China auto exports to Russia

BEIJING — Western sanctions against Russia are boosting demand for China-made light vehicles, and the surge could continue as long as the sweeping sanctions remain in place, an executive with China's auto association said on Monday.

Chinese automakers are also seeking to assemble vehicles in Russia and localize production, Xu Haidong, deputy chief engineer at the China Association of Auto Manufacturers, told reporters.

"There's still huge demand in the Russian market but that won't necessarily be solely reliant on imports," Xu said.

"China's auto exports to Russia will still be in high demand over next 2-3 years and after that China's auto sector will likely increase their localization in the Russian market."

Russia was the top destination for China's auto exports in the first seven months of the year, CAAM data showed, with 464,000 cars sold. Mexico ranked second with 224,000 Chinese imports.

In 2022, Mexico was the top importer of Chinese cars with 254,000 units while Russia was the fifth-largest importer with 162,000 units, CAAM data showed.

Imported Chinese vehicles now account for 49 percent of Russia's market, reaching 40,000 units in June, compared with a pre-war share of just 7 percent in June 2021, according to data from analytics firm Autostat. Chinese automakers are also assembling vehicles in Russia, taking over factories vacated by Western automakers.

China is the world's largest auto market, but Chinese automakers are increasingly looking abroad to offset intense competition and weakening demand at home.