© Reuters. FILE PHOTO: Haval cars produced by Chinese automaker Great Wall Motors are for sale at a dealership in Artyom near Vladivostok, Russia, March 22, 2023. REUTERS/Tatiana Meel
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By Gleb Stolyarov and Roman Churikov
MOSCOW (Reuters) – As the exodus from Western automakers narrows options for Russian consumers, Chinese automakers are filling the gap, forcing Russians to overcome their reluctance to embrace Chinese brands and accept higher prices.
Chinese brands such as Haval, Chery and Geely now account for almost 40% of new car sales in Russia, data from analyst agency Autostat and consultancy PPK showed, up from less than 10% in January-February 2022, taking advantage of the remaining opportunity. by the exit of companies like renault (EPA:), Nissan (OTC:) and Mercedes.
But there are teething problems. Reuters spoke to several Russian car buyers – individuals and dealers – who perceived the quality of some Chinese cars to be inferior to that of their Western rivals and industry insiders said Chinese manufacturers needed to improve their reputations even as their share of market was skyrocketing.
Stepan, 28, who has increasingly driven Chinese cars when using car-sharing services, is among those who need convincing. Among his complaints was the smoothness of the ride.
“I managed to buy a Skoda in 2022. If you want my honest opinion, the difference (with Chinese cars) is huge,” he told Reuters at the Favorit Motors dealership in Moscow.
Czech automaker Skoda Auto, part of the Volkswagen Group (ETR:) and one of several Western automakers that had local car production, is in the final stages of a deal to sell off its Russian assets in the wake of sanctions. Westerners after Moscow sent troops to Ukraine. last february.
Buying his new Chinese car, Alexander, 74, looked for one that included Swedish technology.
“I think over time the reliability will improve,” he said. “For example, I know that (Geely) Tugella has a Volvo engine. This sold this car for me.”
Former Russian President Dmitry Medvedev said on Friday after a visit to China in December that cooperation with Chinese manufacturers was good and consumer perceptions were out of date.
“We used to laugh at some of his designs, but I went for a ride in a local car and looked at others,” he said. “I will say bluntly: the car I drove was certainly no worse than a Mercedes.”
THE COMPETITION DRIES UP
Most Western automakers, which have battled with domestic automakers for market share since they began building factories in Russia in the early 2000s, ceased operations last spring.
“We have lived all our lives focused on European, Japanese, American brands and we have not particularly taken into account the Chinese market, which…has developed at an incredible pace,” said Vladimir Shestak, general director of Altair-Auto in Vladivostok, whose dealership specializes in the Mercedes-Benz and Geely brands.
Although most foreign companies have left Russia or are in the process of leaving, persistent stocks and parallel imports mean that some companies’ cars are still on sale for now.
The Lada brand of the domestic producer Avtovaz is the most popular in Russia. Renault, through its previous majority stake in Avtovaz, had the highest market share among foreign producers before Russia began what it calls its “special military operation” in Ukraine.
While Chinese cars are increasingly filling the gap, a lack of reputation remains a problem, auto industry expert Sergey Aslanyan said.
“Yeah, they have almost no competition here anymore,” he said. “But that doesn’t mean people change their minds quickly.”
The market share of Chinese brands reached 37.15% in January-February, up from 9.48% a year earlier, Autostat and PPK data showed. Sales of exiting European, Japanese and Korean brands dropped from 70% to 22.6%.
However, the sharp turnaround comes amid plummeting new car sales, which plummeted 58.8% in 2022, as lower living standards and a desire for Western-made vehicles made people to reduce their spending and buy more used cars.
In a sign of growing cooperation, China’s Haval is now producing cars locally, while in Moscow, the revived Soviet-era Moskvich is using engine parts, design and engineering from China’s JAC.
But another complaint for consumers is the price. Even Medvedev said the price for the Moskvich seemed a bit high. The Model 3 costs around 2 million rubles ($26,195). Prices for the Lada Granta, Russia’s best-selling car, start at around 680,000 rubles.
“(The Chinese) are bringing a lot of cars, but if we talk about price, not quality, there are no cheap cars at all,” said Maxim Kadakov, editor-in-chief of “Behind the Wheel” magazine.
($1 = 76.3500 rubles)
