russian cars after collaps

This is Where Russians Buy Their Cars After the Collapse of the Car Industry

Because Western corporations are no longer supplying cars to Russia and the factories are at a standstill, people are having to switch to used cars from abroad. Exclusive satellite images show the country’s thriving car markets – and the eerily empty parking spaces in ports and factories.

“Economy from above” is a collaboration between WirtschaftsWoche and LiveEO. This is a translation of the original article written in German by “Maxim Kireev“. Access the original article here.

When Andrei W. hears the word sanctions, a mischievous grin crosses the Russian’s face. For about five years, he says, he has been earning his money by importing used cars. But it has never been as good as it is now. Andrej W. used to buy used U.S. cars at insurance auctions directly in the United States. He was able to ship four to five of them to Russia every month. He earned up to 1000 euros per car. A good living by Russian standards. “Since Europe stopped supplying new cars and the Russian factories came to a standstill, business has literally exploded,” reports the dealer.

Although business with the U.S. is over because hardly any ships from overseas enter Russia, it’s all the better with the EU. He currently buys 40 to 50 used ships a month – mostly somewhere in Germany – and has them shipped to Russia.

Many of the cars that dealer Andrei W. imports end up in huge car markets such as the one in the northeast of St. Petersburg. Just a few years ago, car owners and professional dealers there offered used cars that had once either been imported to Russia as new cars or assembled in one of the numerous Russian locations of international manufacturers. This has changed completely within a few months – in a direction that certainly no one would have thought imaginable last year. Exclusive satellite images from LiveEO show: The huge parking lot of the St. Petersburg car market is now filled primarily with freshly imported cars from Europe that already have a few years under their belt.

Car market Saint Petersburg 2021Car market Saint Petersburg 2022
Car Market Saint Petersburg, Russia
07/17/2021 (left image): One of the largest car markets is located in the north of Russia’s second largest city. On a huge parking lot between prefabricated buildings and car dealerships, private individuals and dealers offer their cars.
21.07.2022 (right image): Despite sanctions, the bazaar in mid-July was anything but empty. Meanwhile, numerous used cars from all over Europe are offered there, which private dealers have imported.
Images: LiveEO/Pleiades

“I spend half the day on the web looking for cars. Mercedes, Porsche, Volkswagen: everything is there. And the rest of the time I look for Lithuanian car transporters and drivers to bring the vehicles from Germany to Russia.” Up to a purchase price of 50,000 euros, the import is completely legal. Anything above that is paid for from an account in Georgia or China. “In grossly simplified terms, the cars are then officially on their way to another country, but remain in Russia.” In any case, he has not yet experienced any problems at EU customs, says Andrej W.

Direct import of used cars from abroad was hardly worthwhile before Putin’s Ukraine war, because Russia sealed off its market – with draconian import duties of up to 48 percent of the purchase price. For older models, customs demanded two to three euros per cubic centimeter upon import, depending on the engine capacity, which equates to up to 6,000 euros for an engine capacity of two liters. A new car from Russian production was usually cheaper. These times are over. Because Russian-made vehicles are simply no longer available, Russian car buyers are prepared to dig deeper into their pockets – they have no other choice.

As a result, the car market in St. Petersburg is not an isolated case. A similar picture can be seen on the Moscow car market in the northeast of the Russian capital: where just a short time ago there were plenty of new cars from Toyota and other Asian and European brands waiting for buyers, used cars now also dominate.

Car Market Moscow Russia 2021Car Market Moscow Russia 2022
Car Market Moscow, Russia
05.06.2021 (left picture): Just a year ago, in addition to Russian used cars, there were also numerous new cars here from Toyota, which operated one of its largest car dealerships in the country.
05/21/2022 (right image): Meanwhile, Japan has also stopped exporting cars to Russia, while Toyota has temporarily shut down its plant in Russia. The parking lot is now also filling up with used cars from Europe, Japan and Korea.
Images: LiveEO/Pleiades, LiveEO/Planet Labs PBC SkySat

Business is particularly good in Vladivostok. Seljony Ugol, or “Green Corner” in German, is known as a transshipment center far beyond the city limits. The city is famous in Russia for the largest car bazaar in Russia. Every month, thousands of used cars from Japan find new Russian owners there.

Car Market Vladivostok Russia 2021Car Market Vladivostok Russia 2021
Car Market Vladivostok, Russia
04.06.2021 (left image): Probably Russia’s most famous car market is in Vladivostok – always an important transshipment point for Japanese right-hand drive cars. The rows of freshly imported cars stretch for more than a kilometer.
27.07.2022 (right picture): Even today, business is booming. The rows are as full as ever. Dealers also report that the lack of alternatives has actually increased demand.
Images: LiveEO/Pleiades, LiveEO/Planet Labs PBC SkySat

Dmitrij Sabora has been in the business for over 15 years and runs the Carwin company in the Russian city on the Pacific. His specialty: buying masses of right-hand drive cars at auctions in Japan and having them shipped to Russia. “Before the war, we had maybe 80 to 90 orders for Japanese cars; in June, we had 300,” the car dealer reports. For him, the reasons are obvious: “The strong ruble offsets the cost of customs clearance, and since there are hardly any new cars left to buy, people have little alternative.”

In fact, Western car companies that used to import new cars or even produce them in Russia have largely turned their backs on Russia. On the one hand, because some suppliers have withdrawn from Russia due to sanctions. Another reason is that the European Union has banned the export of expensive cars with a purchase price of 50,000 euros or more to Russia.

Toyota Plant Saint Petersburg RussiaToyota Plant Saint Petersburg Russia 2022
Toyota Plant, Saint Petersburg, Russia
03.07.2021 (left image): Toyota was among the first manufacturers to set up shop in Russia. The factory has a theoretical production capacity of 100,000 vehicles per year.
18.06.2022 (right image): Production has been at rest since the beginning of March; accordingly, apart from asphalt, there is nothing to be seen where Toyotas used to stand. By summer, the last stocks were delivered to car dealerships and sold.
Images: LiveEO/Pleiades, LiveEO/Planet Labs PBC SkySat

Satellite images show a port terminal near St. Petersburg, for example, where thousands of cars per month used to be loaded from ships onto car transporters. In the meantime, the huge site is empty:

Port of Saint Petersburg RussiaPort of Saint Petersburg Russia
Port of Saint Petersburg, Russia
19.07.2021 (left picture): The port was an important transshipment point for cars. Ships with new cars from the EU landed here. Above all, Korean manufacturers such as Kia and Hyundai exported from their St. Petersburg locations to the Middle East, for example.
21.07.2022 (right image): Because the trade in cars and their production have now come to a standstill, the large parking lot remains empty.
Images: LiveEO/Planet Labs PBC SkySat, LiveEO/Planet Labs PBC SkySat

The parking lot at the customs terminal in the north of the city, also an important transshipment point for new cars, is also almost empty:

Saint Petersburg North Gate RussiaSaint Petersburg North Gate Russia
Customs area “North Gate”, Saint Petersburg, Russia
04.07.2021 (left picture): Just north of the city lies the “North Gate” customs area, where just a year ago hundreds of new cars were waiting to be cleared through customs. Most of the imports were handled by the car companies themselves.
09.06.2022 (right photo): Since Russia’s attack on Ukraine, numerous car companies have stopped doing business in Russia. The large parking lot has been empty for weeks – hardly any vehicles enter the country through official channels.
Images: LiveEO/Pleiades, LiveEO/Planet Labs PBC SkySat

The pictures of the former production sites are also dreary. The French carmaker Renault, which until recently still had its own plant in Moscow, was the first carmaker to withdraw completely from Russia. The parking lot for finished vehicles now resembles an asphalt desert. The future of other manufacturers in Russia is also uncertain. Volkswagen, for example, has shut down production in Kaluga for the time being due to a lack of components from Europe. Russian business media also recently reported, with reference to anonymous sources, that the Wolfsburg company is looking for a buyer for its site in Kaluga, Russia.

The only ray of hope for the Russian new car industry so far remains the plant of the Chinese manufacturer Haval, which started production a few years ago in an industrial area near Tula, south of Moscow. Unlike Europe or Japan, China has not participated in the sanctions against Russia.

Haval Factory Tula Russia

Haval Factory, Tula, Russia (left).
22.05.2022: The only bright spot for the industry is the factory of Chinese manufacturer Haval. Besides Lada, it is the only one that has restarted production. Dozens of new vehicles are waiting to be brought to dealerships.
Renault Plant, Moscow, Russia (right).
24.07.2022: Yawning emptiness as the French company ceded its Moscow plant to the city government. Moscow plans to ramp up production again with Chinese help. Concrete plans for models and unit numbers are not known.
Images: LiveEO/Planet Labs PBC SkySat, LiveEO/Planet Labs PBC SkySat

Accordingly, production continues to run smoothly while new cars wait in a parking lot at the factory site to be picked up for delivery to the dealer. In the meantime, the share of Chinese brands in new registrations in Russia has risen from under five to almost 25 percent. However, overall sales in July were nearly 80 percent below last year’s level.

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