After the war in Russia and Ukraine, the Russian automobile market was expected to become a high-risk market due to fierce competition between Chinese brands that dominated the market after the withdrawal of global manufacturers and global manufacturers seeking to re-enter the market.

The Korea Automobile Research Institute recently published an industrial analysis report titled ‘(Industry Analysis Vol. 146) Changes and Outlook for the Russian Market after the Russo-Russian War.’

According to this, the Russian automobile market has undergone significant changes since the Russo-Ukrainian War, and interest in the possibility of global automobile manufacturers re-entering the market is growing.

The war severely reduced Russia's domestic production base, and economic sanctions by major Western countries and voluntary withdrawals by global manufacturers dramatically changed the automotive supply chain.

Accordingly, the market has shifted to an import-oriented market, with Chinese automobile brands in particular leading the market.

Before the war, the Russian automobile market was dominated by global brands such as Hyundai, Renault, Toyota, and VW, with local production accounting for 80% of total supply.

On the other hand, local production plummeted from 1.4 million units in 2021 to 740,000 units in 2024 as major manufacturers withdrew due to changes in Russian government policy and international sanctions.

The Russian government has pursued a policy of allowing parallel imports and expanding imports of Chinese brands to resolve the shortage of automobiles.

As a result, Chinese brands will account for approximately 80% of new car imports in Russia by 2024, and the share of new car sales has also changed rapidly, with Chinese brands accounting for more than half.

Recently, the Russian government has been strengthening policies to protect the domestic automobile industry and reduce dependence on foreign brands.

Accordingly, the recycling fee, which acts as a non-tariff barrier to imported cars, was significantly increased, and was raised to 8% of the average vehicle price in October 2024, and further increased in January 2025.

In addition, a customs clearance information sharing system was established among EAEU (Eurasian Economic Union) member countries to block price manipulation and tax evasion of imported vehicles, and a policy was introduced to prohibit parallel imports of brand vehicles with official dealers in the country.

The move is seen as a strategy to curb imports from Chinese brands, with Chinese automakers considering ways to strengthen their local production systems to remain competitive in the Russian market.

Although the Russian market is being reorganized around Chinese brands, consumer confidence in Chinese branded vehicles is still low.

In a survey of Russian car buyers in September 2024, 27.6% said they would never buy a Chinese branded car, while 27.5% said they would buy it if they had no choice.

Nevertheless, as the share of Chinese branded vehicles in Russia increases, consumer perception is changing rapidly, with 65.3% of respondents who own Chinese cars saying they are satisfied with their cars.

Global manufacturers re-enter the Russian market Although it is being considered, it is unlikely to easily recover the high market share of the past.

In addition, the Russian government is likely to impose conditions for foreign manufacturers to re-enter the market, such as establishing branches in Russia, joint ventures, technology sharing, and achieving a high localization rate, so companies are expected to become more cautious in their entry strategies.

The Russian market is a high-risk market that is likely to change rapidly depending on the direction of the war, policy changes, and whether Western countries ease sanctions.

Currently, durability and after-sales service quality issues of Chinese brand vehicles are continuously being raised, and there is a high possibility that the Russian automobile market structure will be reorganized in the medium to long term.

Global manufacturers should carefully consider whether to re-enter the Russian market and develop various scenarios and response strategies, such as whether to establish a local production system or maintain existing brand strategies.

A cautious approach is also essential, taking into account the potential for increased competition from Chinese brands and the Russian government's uncertain policy stance.