After the large-scale invasion of Ukraine, Western companies withdrew from Russia. China in particular will now benefit from the structures left behind.
According to insiders, the Chinese car manufacturer Chery uses former factories of Western competitors in Russia to build its vehicles. The company is assembling the cars at facilities that were operated by Volkswagen, Mercedes-Benz and Nissan before Russia’s attack on Ukraine, five people familiar with the process told Reuters.
The Tiggo SUV and vehicles from the Chery brand Exeed, among others, rolled off the assembly lines. Given the weak market in China, the largest Chinese exporter probably wants to expand its Russian business and benefit from underutilized production capacities.
Chery stated that it would supply the Russian market with vehicles. There are no plans to build or buy our own plants. The company did not respond to a question about assembly in the three former Western plants.
After Western carmakers withdrew from Russia, Chinese manufacturers have taken over more than half of the Russian car market. The fact that they are now also expanding production shows how Chinese influence on the Russian economy increased after the start of the war.
The government in Moscow recently imposed import duties in order to motivate foreign car manufacturers to build vehicles in Russia. According to documents from February to August obtained by Reuters, Chery has received approval to produce some models in Russia.
The former VW factory in Kaluga, south of Moscow, will be used, among other things, for the Tiggo, said Mikhail Pogonow, who is responsible for Chery vehicles at the car dealer ASC. Vehicle sales are currently increasing significantly. “Sales growth is already more than 100 percent,” he said.
At the former Nissan factory in St. Petersburg, the Tiggo will be manufactured under the brand name Xcite X-Cross, one of the insiders said. The Xcite brand was hailed as the “best new brand” at the end of September. A Chinese car was launched under a Russian brand name as early as the end of 2022, when the Soviet brand Moskowitsch was revived by the Chinese manufacturer JAC, according to insiders.
One of the insiders said Chery and the Russian government were interested in keeping as little information as possible about production in Russia. A Chery spokesman in Frankfurt said the Russian business had nothing to do with the European expansion plans. The relevant Russian ministries did not respond to requests for comment.
Just last week, the EU states cleared the way for punitive tariffs on electric cars from China, which are due to come into force at the end of October, but at the same time appeared open to a negotiated solution. The EU Commission accuses China of driving down the price of vehicles through massive state subsidies and thus distorting the market. To avoid the tariffs, some Chinese manufacturers are planning to set up production in Europe, including Chery.