Business
China Becomes World’s Top Car Exporter - Fueled by Ukraine War
By Belal Awad · August 6, 2023
In brief…
- Taking advantage of the departure of Western automakers from Russia following its invasion of Ukraine, Chinese car makers have found a major opportunity to expand their market.
- China is now the world's top car exporter.
- Six out of ten of the most popular car brands in Russia are now Chinese.
- Ukraine has branded Chinese car maket Geely a "sponsor of war" for doing business in China.
Taking advantage of the fallout from Russia’s invasion of Ukraine, including sanctions against Moscow and disruption in the global automotive supply chain, China has emerged as the world’s No. 1 car exporter.
“Car makers who have been struggling in the domestic market in China, they’re finding an opportunistic moment when it comes to the Russian market,” said Selina Cheng of the Wall St. Journal. She noted that Chinese car makers are filling the void left by Western manufacturers who have closed down operations in Russia since the start of the war.
The automotive industry is a major component of the Russian economy, employing approximately 300,000 people directly and producing vehicles and parts worth roughly $42 billion in 2020. However, the industry took a hit following the imposition of Western sanctions, which cut off Russia’s access to essential parts such as computer chips. This sanctions also prompted many foreign brands, such as BMW, Hyundai and Ford, to halt production or withdraw from the country entirely.
Chinese manufacturers stepped in to fill the void, with six of the ten most popular car brands in Russia now China made. In the process, Russia has become the No. 1 consumer of Chinese vehicles, spending roughly $6 billion in the first four months of 2023.
Expansion into the Russian market, however, is not without its challenges. As Cheng noted, “Chinese car brands have become more mature. I think a lot of them are seriously considering the prospect of one day becoming the world’s biggest auto manufacturer. And in the grand scheme of things, Russia may not be a big consideration for them because of the constraints in this market.”
In addition, Chinese automakers must grapple with the negative publicity associated with operating in Russia. Ukraine has branded Chinese manufacturer Geely a “sponsor of war” for continuing its operations in Russia. Despite these challenges, Chinese expansion into the Russian auto market underscores increasingly close ties between Beijing and Moscow, while giving China the title of world’s No. 1 auto exporter.