Chinese End-Around Supplying Russian Auto Market, Report Says

Several Chinese auto brands may have problems supplying their cars to Russia because of sanctions and growing accusations by governments and human rights groups that Western automakers are trying to get around bans on sales to Russia via their Chinese partners.

One of the Chinese automakers in question is FAW, which may suspend further supplies of its Jetta model, a joint product made with Volkswagen, to the Russian market due to a recent scandal in Germany, which came as a result of an investigation of VW’s work in Russia by the German newspaper Die Zeit.

Shipments of Jettas to Russia began last month. These are practically copies of original VW models, such as Tiguan and Polo. Components for them are produced by the Chinese concern FAW.

Previously, Jetta was imported to Russia under the parallel import program, but now there is an official website, Jetta-Motors in Russia, which offers the VA3 sedan, as well as the compact crossovers VS5 and VS7. Formally, Jetta vehicles are supplied to Russia by FAW. According to a recent report in Die Zeit, however, “it does not seem very real” that this would be possible without the complicity of the German automaker.

There are accusations in the Die Zeit report, which have been denied by VW, that it has done an end-around the sanctions.

The same issue and accusation is being launched against China National Machinery Industry Corporation (SINOMACH), which last year began delivering its Oting Paladin SUVs to Russia. In China, these cars are manufactured via a joint venture between Dongfeng and Nissan. The Oting Paladin is based on the Nissan Terra SUV, but differs in design and engine options. Both models are manufactured on the same line at the Zhengzhou Nissan plant.

According to the SIMOMACH website, the Oting brand in Russia is derived from “a Japanese concern, with a Japanese engine, created using Japanese technology.” Comments from analysts suggest Nissan could face serious criticism in Japan. the EU and North America for not honoring the sanctions against Russia, which arose from the country’s invasion of Ukraine.

Also in the spotlight is the Solaris brand, formerly operated by the Volkswagen Group in Russia, which sells vehicles developed by the Hyundai Group.

In addition to the former Hyundai assets in Russia, AGR Automotive Group currently remains an owner of the former production facilities of Volkswagen Group in Russia.

Many cars of Chinese brands officially sold in Russia are partially or fully equipped with key components, such as engines, from Western automakers, which has led to inquiries and investigations as to where the supplies of components are parts are coming from. Stockpiles of parts in Russia preceding sanctions should be exhausted by now based on production data.

Since Russia's invasion of Ukraine in February 2022, the U.S., UK and EU, along with countries including Australia, Canada and Japan, have imposed more than 16,500 sanctions on Russia.