The German automaker VW has decided to prevent the supply of cars manufactured at factories in China to Russia. Dealers participating in parallel import schemes will be blacklisted. Whether the threats of the automaker are real and how this will affect the price and guarantee of Chinese Volkswagens, Izvestia investigated.
Close ties and common border
VW is going to take action against the “gray” export of its cars from China to Russia, a representative of the German concern told Handelsblatt.
The publication notes that there are close economic ties between the Russian Federation and China, including in the automotive business. Thanks to the supply of used cars, “trade routes from China to Russia have been laid.” Gray dealers can now use the same trade routes to supply new vehicles manufactured in factories in the PRC. Geography also contributes to exports: the two countries are connected by a border of more than 4,000 km, which cannot be fully controlled.
Add to blacklist
According to the VW Group, there is no evidence that the business of manufacturing new cars from China to Russia is currently being carried out on a large scale. However, the concern is striving in principle to stop possible exports to the gray market.
It is not so easy. First, VW has entered into joint ventures with Chinese state-owned automakers, which limits the influence of the German side. Secondly, the concern cannot directly influence economically independent Chinese dealers.
Under these conditions, VW is left to create a blacklist of car dealers who have been seen exporting cars gray outside of China. Companies from this list will not receive new machines. This will complicate the sale of Chinese Volkswagens to Russia, the company believes. In addition, the VW subsidiary will not supply spare parts for Chinese-made cars to our country. Recall that many models are specially designed for the local market and differ from those presented in Europe.
Germans from China
Some VW models are indeed supplied to Russia from China under the parallel import scheme. However, the number of imported cars is low. Mostly electric vehicles are being transported – ID.3, ID.4 and ID.6. In total, more than 300 electric trains were imported last year. Among gasoline cars, the main volume is accounted for by the VW Bora sedan – 62 units were registered in 2022.
A large consignment was imported by one of the leading multi-brand dealers. Bora is slightly shorter than the popular VW Jetta (4672 mm) and has an original body. At the same time, the machine is built on the same MQB platform. Under the hood is a 1.5 atmospheric engine (113 hp) paired with a 6-speed automatic or a 1.4 turbo four (150 hp) and a robot. The price tag starts from 2.5 million rubles.
“Currently, we do not record any difficulties with the import of Volkswagen brand cars from China, there have not yet been any changes in this direction,” Renat Tyukteev, director of retail sales at Avilon AG, told Izvestia. — We import cars only as a legal entity, so the purchase becomes more profitable for dealers and end customers.
Digging shallow
The actions of the German concern are primarily associated with economic and reputational sanctions against automakers, rather than with a sincere desire to support politics or voluntarily abandon business, said Jan Heizeer, vice president of the National Automobile Union.
“Volkswagen is starting to get signals that its dealers are selling cars to Russia. The company has to react. Then she, like any official, reports that the work has been done, that’s the ban. The concern will interrupt the chain to some depth, and it is unlikely to dig further. This is not an ideological story, this is a story about how not to be fined. And even the Chinese will say that they will not supply cars to Russia, but they will think to themselves: “We will look for new forms, new routes,” the expert said.
Intermediaries will help out
Parallel imports work in a subtle way, notes Yang Haizeer. Deliveries of cars in this way do not go directly, but through intermediaries. Therefore, business will be able to adapt to the prohibitions of the German concern.
– The car can come through the Emirates, if someone needs a “Volkswagen” in such crooked ways. Here the price is important, and marginality must be shown. Similarly with market prices, as evidenced by the decline in car sales, registrations are falling. When we buy a new Mercedes, it is sold by the dealer to a private individual. A private person uses it for some time, and then sells it to Kazakhstan, Kyrgyzstan and Armenia. With some delay, this car finally gets to us. Another thing is that hardly anyone will fight for VW Bora,” said Haytseer.
The expert admitted that such sanctions could affect not only VW, but also other brands whose cars are produced at joint ventures in China. For example, Toyota and Mazda.
No warranty
Threats by VW to stop supplying cars to blacklisted dealers may affect not only the price of cars imported from China through parallel imports, but also the guarantees for such cars.
Yang Haytseer calls the guarantee for cars supplied through parallel imports doubtful, but lawyers believe that the buyer has the right to count on it.
According to the lawyer of the “Freedom of Choice” movement Sergey Radko, the law “On the Protection of Consumer Rights” (ZZPP) allows you to make claims against the seller, the importer, and the manufacturer of the car, regardless of how it was imported into our country. He notes that this law only applies to situations where the seller or importer is a legal entity. If the transaction is concluded between individuals, the RFP does not work, the lawyer emphasized.
“In this case, claims relating to warranty obligations will have to be filed directly with the automaker,” the lawyer notes.
