Roadblocks Ahead

THE IMPACT OF SANCTIONS ON

THE RUSSIAN AUTO INDUSTRY

Chris Miller and Caroline Nowak

AUGUST 2024

A M E R I C A N E N T E R P R I S E I N S T I T U T E
Executive Summary
While Western sanctions targeting many sectors of resources into domestic production, but Russia is man-
Russia’s economy have had underwhelming impacts, ufacturing only a fraction of its prewar levels. Produc-
they have disproportionately affected one of Russia’s tion costs are higher than they were before the war, and
largest manufacturing industries: the auto sector. Chinese brands now dominate the Russian market.
Before the invasion of Ukraine in February 2022, Rus- The Russian auto industry provides a case study
sia imported substantial volumes of auto parts from for understanding potential future sanctions on
the West, and its domestic car production relied heav- China. China’s economic structure resembles Rus-
ily on partnerships with foreign firms. After the war sia’s auto industry, with its focus on complex man-
began, Western companies’ withdrawal, coupled with ufactured goods relying on multinational supply
the complexity of auto manufacturing, froze supply chains. Imposing sanctions or trade restrictions on
chains and halted manufacturing. China would likely mirror the effects on Russia’s auto
The Russian government adopted three main strat- industry, with significant repercussions for the global
egies to cope: pressuring foreign firms to transfer fac- economy. While disruptions to Russia’s auto indus-
tories to Russian ownership, rebuilding supply chains try have harmed primarily Russia, disruptions to Chi-
with assistance from China, and increasing imports of nese manufacturing would have far greater global
finished cars from China. The government has poured consequences.

1
Roadblocks Ahead
THE IMPACT OF SANCTIONS ON THE RUSSIAN
AUTO INDUSTRY
Chris Miller and Caroline Nowak

When the West imposed financial sanctions and tech deeply integrated with US, European, Japanese, and
export controls on Russia after its invasion of Ukraine Korean multinational companies. Foreign firms like
in February 2022, policymakers did not expect that Hyundai, Renault, Toyota, and Volkswagen owned
they would hit the country’s auto industry hardest. and operated many Russian auto plants. Russia’s
Western sanctions targeted many of Russia’s biggest domestically owned car plants depended on foreign,
banks, its defense firms, and its efforts to expand nat- especially European, auto parts. Russia produced
ural gas production. Yet with the potential exception many cars but relied on supply chains that stretched
of aircraft manufacturing, no segment of Russia’s across borders.
economy was hit harder than autos. Car production Cars require thousands of components that
in 2022, the first year of the war, was a mere 32 per- must work together seamlessly. A typical car has
cent of the prewar level. By 2023, it had recovered to 20,000 parts produced by 18,000 different suppliers,
only 38 percent.1 In most sectors of Russia’s economy, according to one study.2 Moreover, every car type is
Western sanctions were less impactful than expected. slightly different. An engine that works in one car can-
In the automotive industry, they hit harder than any- not easily be swapped into another. Using new compo-
one intended or imagined. nents often requires lengthy or expensive redesigns.
This report examines the Russian auto industry As the electronics in cars have gotten more complex,
under Western sanctions as a case study of how com- the difficulty of switching components has grown.
plex manufacturing operations adjust—or don’t— Supply chains involving 20,000 parts and
to geopolitical shocks. Autos are an important sec- 18,000 firms have many points of failure. Russia’s
tor of the Russian economy, but the example of the auto supply chains stopped working at the outbreak
Russian auto industry is more significant as a rare of the war. China’s complex manufacturing sectors
window into how potential future conflicts and would probably face comparable problems amid a
sanctions might affect China’s economy. Russia similar crisis, even if not deliberately disrupted by
mostly exports commodities, making it quite differ- restrictions or sanctions. Of China’s exports, over
ent from China, the world’s largest producer of com- 25 percent are electronics, industrial machinery is
plex manufactured goods like machines, electronics, over 15 percent, and autos are a small but rapidly ris-
and increasingly cars. Russia’s auto industry is the ing segment. In other words, roughly half of China’s
best case study for understanding how future crises exports are of complex manufactured goods. The
or sanctions would affect China’s complex manufac- Russian auto industry’s experience suggests that a
turing industries. military crisis could produce vast economic disrup-
The prewar Russian auto industry looks like many tion even if neither side directly targeted production
manufacturing operations in China today. It was by imposing sanctions.3

2
ROADBLOCKS AHEAD CHRIS MILLER AND CAROLINE NOWAK

Russia’s Prewar Auto Industry first plant in 2002, and Toyota opened a factory in
Saint Petersburg in 2005.12 Volkswagen opened pro-
Before the Russia-Ukraine war, Russia’s auto indus- duction in Kaluga Oblast in 2006.13 Hyundai’s first
try was deeply integrated with international suppli- plant opened several years later.14
ers and foreign car companies. In 2021, 70 percent It wasn’t only carmakers that opened facilities in
of cars made in Russia were produced by European, Russia. Their suppliers did too. Car manufacturers
Japanese, South Korean, or US firms.4 Including joint outsource a substantial share of their component
ventures between foreign and Russian firms increases production to suppliers. Foreign auto part suppliers
the share to 92 percent.5 This section examines the opened 28 new factories in 2012–19 alone.15 For exam-
dependence of Russia’s auto manufacturing base on ple, in 2006, Johnson Controls opened a joint venture
foreign producers and suppliers; subsequent sections in the Russian city of Tolyatti for car seat parts.16 In
explore how these relationships changed after the 2007, Magna partnered with Russian GAZ to produce
outbreak of the war. plastic auto parts at a plant in Nizhny Novgorod.17
Russia has had a large car-manufacturing industry Germany’s ZF Friedrichshafen opened a production
since the 1920s. Almost immediately after the Bolshe- facility in the city of Naberezhnye Chelny to produce
viks seized power and expropriated private property transmissions for Russian truck maker Kamaz.18 In
during the 1917 revolution, they established partner- 2014, Continental began producing air conditioning,
ships with Western car firms to open plants in the power steering systems, engine control units, fuel
Soviet Union. In 1932, the USSR’s GAZ auto manufac- supply units, and fuel rail systems in Kaluga region.19
turer cut a deal with Ford to produce Ford-designed In 2021, France’s Faurecia opened a new facility in
cars and trucks.6 In the postwar period, European Tolyatti to produce seat systems.20
companies like France’s Renault and Italy’s Fiat These facilities—alongside imported car com-
alongside US automakers like Ford helped the USSR ponents—generated substantial sales for Western
open car and truck factories and licensed designs and firms. Magna recorded $371 million in sales in Rus-
technology to Soviet enterprises.7 However, these sia, including products from its Russian manufactur-
deals generally focused more on licensing than on ing operations, which largely supplied Volkswagen
selling foreign-made parts to Soviet factories. At the and Hyundai.21 Germany’s Bosch, one of the world’s
time, cars were far simpler, and their supply chains biggest auto part suppliers, sold $1.3 billion of com-
were too. ponents in Russia in 2021.22 In total, Russia imported
After the Soviet Union collapsed, Russia’s car over $9 billion of auto parts in 2021, of which 76 per-
industry shrank in the 1990s, as inefficient domes- cent was from Western countries (including Japan and
tic factories struggled to compete with foreign car South Korea).23 As Figure 1 shows, Russia was a major
firms. Once Russia’s economy stabilized and con- importer of car parts, including complex and hard-to-
sumers’ purchases of new cars increased, foreign replace components like engines and gearboxes.
firms were allowed to expand factories in Russia. By
the mid-2000s, Russia was the second largest Euro-
pean car market (after Germany), attracting major Why Russia’s Auto Industry Froze
investments from most large foreign automakers. In
1997, Kia began auto assembly in Kaliningrad.8 When Russia invaded Ukraine in February 2022,
In 1997, Fiat announced an $850 million project many parts of the Russian auto supply chain froze.
to produce over 100,000 cars annually in Nizhny This was partly because of direct sanctions—though
Novgorod.9 In 1999, BMW announced plans to only certain types of Western cars and car parts faced
invest $70 million to assemble cars in Kaliningrad.10 controls—but also because other sanctions, reputa-
In 2001, General Motors signed a joint venture to tional risk, and the likelihood of future restrictions
produce cars at an Avtovaz plant.11 Ford opened its convinced many Western automakers and car part

3
ROADBLOCKS AHEAD CHRIS MILLER AND CAROLINE NOWAK

Figure 1. Russian Import Value by Component, 2021

$1,400

$1,200

$1,000
US Dollars (Millions)

$800

$600

$400

$200

$0
rs

lts

es

es

es

es

s
pm d
En t
en
le

el

or

el

ag

ck

ne
ui an
pe

Be

ak

ox

ip

ch
Ax

he

he
ste

at

Lo

gi
rb
tP
m

Br

Eq ing
ut
rb

di
W

W
at

Ai
Sy
ive
Bu

us

Cl
ea

Ra
o
Se

ng ht
g
rv

ha
Dr
G

rin

ali Lig
sio
ty

Se

Ex

ee
fe

en
d
Sa

nd

St
an

sp

gn
sa
es

Su

Si
er
ak

uffl
Br

Source: UN Comtrade Database, Trade Data, [Link]

manufacturers that continuing operations in Russia, cars and relevant car parts remained legal in several
and even selling directly into Russia, was untenable.24 key Western countries.
In the weeks after the war began, banking sys- Direct prohibitions were not the only factor shap-
tem sanctions disrupted many existing financial ing car companies’ decision-making. Just days after
flows between Russia and the outside world, as the the war began, foreign automakers began announcing
US sanctioned several major Russian banks and the delays or suspensions to manufacturing operations in
EU kicked Russia out of the SWIFT payments net- Russia because of logistical difficulties, supply-chain
work and seized the Russian central bank’s foreign disruptions, and the perception of future regulatory
exchange reserves.25 None of these measures made and reputational risk.
it impossible to continue operating in Russia—many At the onset of the invasion, France’s Renault
firms have—but they added to the cost and under- announced a pause in some of its Moscow opera-
scored the risk of doing business there. tions, citing logistical problems.30 Following criti-
Some sanctions did directly target the auto indus- cism from Ukrainian President Volodymyr Zelenskyy,
try. The EU banned exports of luxury goods to Rus- Renault fully suspended manufacturing in Moscow
sia, which included cars priced above 50,000 euros on March 23, 2022.31 On February 28, 2022, General
as well as their parts.26 Japan implemented similar Motors and Volvo announced that they would termi-
rules.27 The US auto export rules appear to have nate exports to Russia, while Mitsubishi announced
been even stricter, limiting trade in most types of it might end Russian sales and production.32 Germa-
cars that were previously sold to Russia.28 These ny’s Daimler announced it would immediately freeze
rules were updated in 2023 and 2024 to tighten business in Russia, including a joint venture with Rus-
restrictions.29 Yet trade in many types of cheaper sian Kamaz, while Mercedes-Benz sought to divest its

4
ROADBLOCKS AHEAD CHRIS MILLER AND CAROLINE NOWAK

Table 1. Automobile Production and Sales The Collapse of Russia’s Auto Supply Chains
Production of Sales of
Russia couldn’t control foreign firms’ decision to halt
Light Automobiles Passenger Cars
Year (Thousand Units) (Thousand Units) production, but it had full legal authority over facto-
ries on Russian territory. There were no legal reasons
2018 1,565 838.0 why Russia couldn’t have immediately expropriated
foreign factories that shut down, forcing them to
2019 1,525 863.4
restart production. Legal limits and respect for the
2020 1,262 745.0 rule of law have not generally deterred the Kremlin
from expropriating assets. Yet immediate expropria-
2021 1,365 777.4 tion couldn’t have solved Russia’s auto problem. Fac-
2022 451 244.7 tories struggled to function because they couldn’t
source the components they needed. Reworking sup-
2023 537 515.5 ply chains would take many months. In some cases, it
is still underway—two and a half years later.
Source: Rosstat, Promyshlennoye Proizvodstvo v Rossii [Industrial
Production in Russia], 2023 [Link] How do we know that the decline in Russian auto
mediabank/Prom_proiz-vo_2023.pdf; Rosstat, “O promysh- production wasn’t primarily because demand for cars
lennom proizvodstve v 2023 godu” [About Industrial Pro- fell? Given the shock of the start of the war, Russians’
duction in 2023], 2023, [Link]
mediabank/10_31-[Link]; and Rosstat, “Optovaya tor- demands for durable goods of all types fell in 2022.
govlya i tovarnye rynki” [Wholesale Trade and Commodity Mar- Excluding real estate, cars are the most expensive
kets], [Link] product most people ever buy, so they are particularly
responsive to changes in economic perception. Some
cars are purchased on credit, so the increase in inter-
15 percent stake in Kamaz.33 On March 1, 2022, Jaguar est rates in 2022 also deterred car purchases.
Land Rover suspended exports to Russia, while Ford Official Russian data report that in 2022, Russians’
announced the termination of its Russian operations, car purchases fell to 31 percent of the prewar level,
including a joint venture with Russia’s Sollers.34 roughly the same extent to which car production fell
Japanese and South Korean automakers followed that year, making it difficult to determine whether
suit. On March 2, 2022, Toyota said it would sus- the decline in purchases was due to a preference not
pend production at its Saint Petersburg plant, while to buy cars or an inability to do so caused by supply-
Honda announced it would end exports to Russia.35 chain issues and import difficulties (Table 1). How-
Also on March 2, Hyundai announced it would pause ever, in 2023, car sales recovered to 66 percent of
operations at its Saint Petersburg plant, though it the prewar level, whereas car production increased
planned to reopen the following week and cited parts only slightly, to 39 percent of prewar numbers. The
shortages for the shutdown.36 Mazda suspended com- differential was met by imports, largely from China.
ponents shipments to its joint venture plant with The gap in 2023 between demand and local produc-
Sollers, but production was expected to continue with tion illustrates the enduring difficulties created by
existing inventory.37 On March 3, Volkswagen halted supply-chain disruptions in the Russian auto sector.
production at sites in Kaluga and Nizhny Novgorod As Figure 2 shows, imports of every category of car
while also suspending exports to Russia.38 Also on part slumped around the start of the war, in early 2022.
March 3, Nissan announced that it halted exports to Most are still well below their prewar level. Imports of
Russia, but it did not suspend production in Russia some parts—like airbags—remain close to zero, sug-
until June 28, 2022.39 The following week, German gesting that Chinese replacements couldn’t be found.
parts supplier Continental suspended production at Other categories saw a significant shift toward imports
its Kaluga plant.40 from China.

5
 Weight (Kilograms) Weight (Kilograms) Weight (Kilograms) Weight (Kilograms)

Ja Ja

0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Ja n. n
n

0
Ja

200,000
400,000
600,000
800,000
1,000,000
1,200,000

0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000

0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
20,000,000
n M . 20
20 M . 20
M . 20
ar 2 ar 2 M 22 ar 2
M . 20 1 ar M . 20 1
M . 20 1 ay 2 .2 ay 2
ay 2 1 02 1
M 2 Ju 202
Ju 20 1
l 2
Ju 202
l ay l
Se y 20 1 Se y 2 1 20 Se y 2 1
p 2 pt 02 22 p 02
Ju N t. 2 1
ROADBLOCKS AHEAD

N t. 2 1 N .2 1 ly ov 0
ov 02 ov 0
2 20 2
Ja . 20 1 22 Ja . 20 1
Ja . 20 1 n 2 Se n 2
n 2 pt M . 20 1
M . 20 1 M . 20 1 .2 ar 2
ar 2 ar 2
M . 20 2 M . 20 2 N 02
2
M . 20 2
ay 2
ay 2 ov
ay 2 2 .2 2
Ju 20 2 Ju 202
l 2
Ju 202
l 02 l
Se y 20 2 Se y 2 2 Ja
n. 2 Se y 2 2
pt 22 pt 02 20 p 02
N .2 N .2 2 N t. 2 2
ov 0 ov 0 M 23 ov 0
. 2
2 . 2 ar Ja 20 2
Ja . 20 2 Ja 20 2 .2 n 2
n 2 n 2 02
Panel A. Bumpers

Panel G. Wheels
M . 20 2
M . 20 2 M . 20 2 3

Panel E. Gearboxes
ar 2

Panel C. Windshields
ar 2 ar 2 ay
M . 20 3 M . 20 3 20 M . 20 3
ay 2 ay 2
ay 2 3 Ju 23 3
Ju 20 3 Ju 202 ly Ju 202
l
l 2 l 20 Se y 2 3
Se y 20 3 Se y 2 3 23
pt 23 pt 02 Se p 02
N .2 N .2 3 pt N t. 2 3
ov 02 ov 0 .2 ov 0
.2 3 . 2 23 02 . 2 23
02 02 3 02
3 3 3

6
Weight (Kilograms) Weight (Kilograms) Weight (Kilograms) Weight (Kilograms)
Figure 2. Net Weight of Car Component Imports, 2021–23

Ja Ja
0
100,000
200,000
300,000
400,000
500,000

n Ja Ja n
n

0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000

0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
M . 20 M . 20
ar 2 M . 20 M . 20 ar 2
ar 2 ar 2 M . 20 1
M . 20 1 M . 20 1 M . 20 1 ay 2
ay 2 1
1 ay 2
1
ay 2
Ju 202
Ju 202
l Ju 202 Ju 20 1
l 2 l
Se y 2 1 l Se y 2 1
Se y 2 1 Se y 20 1 p 02
pt 02
N .2 1 p 02 p 2 N t. 2 1
ov 0 N t. 2 1 N t. 2 1 ov 0
2
2 ov 0
2
ov 02
Ja . 20 1
Ja . 20 1 Ja . 20 1 Ja . 20 1 n 2
n 2 n 2 n 2
M . 20 1 M . 20 1 M . 20 1
ar 2 M . 20 1 ar 2
ar 2 ar 2 M . 20 2
M . 20 2 M . 20 2 M . 20 2 ay 2
ay 2 ay 2 2
2 ay 2
2 Ju 202
Ju 202
l Ju 20 2 l
Se y 2 2
Ju 202
l l 2 Se y 2 2
p 2 0 Se y 2 2 Se y 20 2
p 2 p 02
N t. 2 2 p 02 N t. 2 2
ov 0 N t. 2 2 N t. 2 2 ov 0
. 2 ov 0 ov 0
2 . 2
Ja 20 2 . 2 Ja 20 2
Ja 20 2 Ja . 20 2
n 2 n 2
n. 22 n 2 M . 20 2
Panel D. Brakes

M 20
Panel B. Seat Belts

ar 2 M . 20 2 M . 20 2 ar 2
ar 2 ar 2
Panel F. Drive Axles

M . 20 3 M . 20 3 M . 20 3
ay 2 M . 20 3 ay 2
3 ay 2 ay 2 3
3 Ju 20 3 Ju 202

Panel H. Suspension Systems

Ju 202
l Ju 202 l 2 l
Se y 2 3 l Se y 20 3 Se y 2 3
p 2 0 Se y 2 3
p 2 pt 02
N t. 2 3 p 02 N .2 3
ov 0 N t. 2 3 N t. 2 3 ov 0
ov 0 ov 02 . 2 23
. 2 23 . 2 23 .2 3
02 02 02
3
02
3 3
3
CHRIS MILLER AND CAROLINE NOWAK

(continued on the next page)

 Weight (Kilograms) Weight (Kilograms) Weight (Kilograms) Weight (Kilograms)

Ja

0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
Ja n Ja Ja
n

0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
n

0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
n

0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
M . 20 M . 20 M . 20 M . 20
ar 2 ar 2 ar 2 ar 2
M . 20 1 M . 20 1 M . 20 1 M . 20 1
ay 2 ay 2
ay 2
1 1 1
ay 2
1
Ju 202
Ju 202
l l Ju 202
l Ju 202
l
Se y 2 1 Se y 2 1 Se y 2 1 Se y 2 1
0 p 02 0
ROADBLOCKS AHEAD

p 2 N t. 2 1
pt 02 p 2
N t. 2 1 ov 0 N .2 1 N t. 2 1
ov 0
2 2 ov 0
2 ov 0
2
Ja . 20 1 Ja . 20 1 Ja . 20 1
Ja . 20 1
n 2 n 2 n 2 n. 2
M . 20 1 M . 20 1
ar 2 M . 20 1 M 0 1 2
ar 2 ar 2 ar 2
M . 20 2 M . 20 2 M . 20 2 M . 20 2
ay 2 ay 2
ay 2
2 2 2
ay 2
2
Ju 202
Ju 202
l l Ju 202
l Ju 202
l
Se y 2 2 Se y 2 2 Se y 2 2
Se y 2 2
p 02 p 02 p 2 0 p 2 0
N t. 2 2 N t. 2 2 N t. 2 2 N t. 2 2
ov 0 ov 0 ov 0
ov 0
. 2 . 2 . 2 . 2
Panel I. Radiators

Ja 20 2 Ja 20 2 Ja 20 2
Ja 20 2 n 2

Panel M. Airbags
Panel K. Clutches
n 2 M . 20 2 n 2 n 2
M . 20 2 ar 2 M . 20 2 M . 20 2
ar 2 ar 2 ar 2
M . 20 3 M . 20 3 M . 20 3 M . 20 3
ay 2 ay 2
ay 2
3 3 3
ay 2
3
Ju 202
Ju 202
l l Ju 202
l Ju 202
l
Se y 2 3
Se y 2 3 p 2 0 Se y 2 3
p 02
Se y 2 3
pt 02 N t. 2 3 p 02
N t. 2 3 N t. 2 3

Panel O. Lighting and Signaling Equipment

N .2 3 ov 0 ov 0 ov 0
ov 0 . 2 23
. 2 23 . 2 23 . 2 23
02 02 02
02
3 3 3 3

7
Note: The red line in February 2022 marks Russia’s invasion of Ukraine.
Weight (Kilograms) Weight (Kilograms) Weight (Kilograms) Weight (Kilograms)

Ja Ja Ja Ja
n n n n
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000

0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000

0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
M . 20 M . 20 M . 20 M . 20
ar 2 ar 2 ar 2 ar 2
M . 20 1 M . 20 1 M . 20 1 M . 20 1

Source: UN Comtrade Database, Trade Data, [Link]

ay 2 ay 2 ay 2 ay 2
1 1 1 1
Ju 202 Ju 202
l l Ju 202
l
Ju 202
l
Se y 2 1 Se y 2 1 Se y 2 1 Se y 2 1
p 02 p 02 pt 02 pt 02
N t. 2 1
ov 0 N t. 2 1 N .2 1 N .2 1
2 ov 02 ov 0 ov 0
Ja . 20 1 Ja . 20 1 2 2
Ja . 20 1 Ja . 20 1
Figure 2. Net Weight of Car Component Imports, 2021–23 (continued)

n 2 n 2 n 2 n 2
M . 20 1 M . 20 1 M . 20 1 M . 20 1
ar 2 ar 2 ar 2 ar 2
M . 20 2 M . 20 2 M . 20 2 M . 20 2
ay 2 ay 2 ay 2 ay 2
2 Ju 20 2 2 2
Ju 202
l ly 2 Ju 202
l
Ju 202
l
Se y 2 2 Se 20 2 Se y 2 2 Se y 2 2
pt 02 pt 22 p 2 0 p 2 0
N .2 2 N .2 N t. 2 2 N t. 2 2
ov 0 ov 02 ov 0 ov 0
. 2 . 2 . 2
Ja 20 2 Ja . 20 2 Ja 20 2 Ja 20 2
Panel N. Locks

Panel P. Engines
n 2 n 2 n 2 n 2
M . 20 2 M . 20 2 M . 20 2 M . 20 2
ar 2 ar 2 ar 2 ar 2
Panel L. Steering Wheels

M . 20 3 M . 20 3 M . 20 3 M . 20 3
ay 2 ay 2 ay 2 ay 2
3 3 3
Ju 202 Ju 20 3
l ly 2 Ju 202
l
Ju 202
l
Panel J. Mufflers and Exhaust Pipes

Se y 2 3 Se 20 3
p 2 0 p 2
Se y 2 3
p 02
Se y 2 3
p 02
N t. 2 3 N t. 2 3 N t. 2 3 N t. 2 3
ov 0 ov 02 ov 0 ov 0
. 2 23 .2 3 . 2 23 . 2 23
02 02 02 02
3 3 3 3
CHRIS MILLER AND CAROLINE NOWAK
ROADBLOCKS AHEAD CHRIS MILLER AND CAROLINE NOWAK

Figure 3. Car Component Exports to Russia, as a Share of January 2022 Car Component Exports
to Russia
Panel A. From the US Panel B. From the EU
120% 120%

100% 100%

80% 80%

60% 60%

40% 40%

20% 20%

0% 0%
ar 2

22

pt 2

ov 22

ar 3

23

20 3
23

ar 2
M 022

Ju 22

pt 2
ov 22

n. 2

ar 23
M 023

Ju 23

pt 3
ov 23
c. 23
23
2

02

02

02

g. 02

M 02

Se 202

02

Se 202
20

20

20

20

20

20

N 20

20

20

N 20
De . 20
20
.2

.2

.2

Au ly 2
.2

.2

.2
2

.2
ay

ly

ay
n.

n.

n.

ay

ly

ay

ly

.
Ju

Ju
M

M
M

M
Ja

Ja
Se

Ja

M
Ja
N

Panel C. From China Panel D. From Japan

140% 120%

120% 100%
100%
80%
80%
60%
60%
40%
40%

20% 20%

0% 0%
ar 2

pt 3
ov 23
c. 23
23
M 022

Ju 22

pt 2
ov 22

n. 2

ar 23
M 023

Ju 23

ar 2

pt 3
ov 23
c. 23
23
M 022

Ju 22

pt 2
ov 22

n. 2

ar 23
M 023

Ju 23
M 02

Se 202

02

Se 202

M 02

Se 202

02

Se 202
N 20
20

N 20

20

20

De . 20
20

20

N 20

20

20

N 20
De . 20
20
.2

.2
2

.2

.2
.2
2

.2
n.

ay

ly

ay

ly

n.

ay

ly

ay

ly

.
Ja

Ja
M
Ja

M
Ja

Panel E. From South Korea Panel F. From Other Countries

120% 300%

100% 250%

80% 200%

60% 150%

40% 100%

20% 50%

0% 0%
b. 2
ar 2
Ap 022

M 022

Ju 022

Ju 22

g. 2
pt 2

.2 2
ov 22

c. 2
22
Fe 02

M 02

Au 02
Se 202

O 202

De 0 2

ar 2
M 022

Ju 22

pt 2
ov 22

n. 2

ar 23
M 023

Ju 23

pt 3
ov 23
c. 23
23
20

20

M 02

Se 202

02

Se 02
2
.2

2
2

.2

20

N 20

20

20

N 20
De . 20
20
.2

.2

2
r.
ay

ne

ly

.2
n.

ct

n.

ay

ly

ay

ly

.
Ja

Ja
N

M
Ja

Note: The red line in February 2022 marks Russia’s invasion of Ukraine.
Source: UN Comtrade Database, Trade Data, [Link]

The collapse in imports has been driven by West- at less than 10 percent of prewar levels almost every
ern countries shipping fewer car parts to Russia month for which data exist. Japan and South Korea are
(Figure 3). The US and EU have exported auto parts selling higher volumes than the US, generally around

8
ROADBLOCKS AHEAD CHRIS MILLER AND CAROLINE NOWAK

Table 2. Average Cost to Produce Light Russian media reported in April 2022 that Rus-
Automobiles (Rubles) sian carmaker Lada would produce “anti-crisis” mod-
els without antilock brakes and other electronics.41
2017 629,532
Even these models faced production troubles. In July
2018 850,464 2022, Avtovaz reportedly could not get enough seat
belts from China to make its new simplified Lada
2019 959,639 Niva Legend.42 The CEO of Renault said in June 2022
2020 798,771 that sanctions would force Russia to make cars with-
out components such as airbags and antilock brakes,
2021 925,240 remarking, “There are no parts that enter anymore.”43
In July 2022, Russian firm UAZ also began selling
2022 668,892
models without airbags, antilock brakes, and the sat-
2023 911,516 ellite emergency response system.44 A car magazine
reported that the UAZ Patriot might be produced
2024 976,188 without an automatic transmission, which would
Source: Rosstat, Promyshlennoye Proizvodstvo v Rossii [Industrial ordinarily come from France.45
Production in Russia], 2023, [Link]
mediabank/Prom_proiz-vo_2023.pdf.
Rebuilding Russia’s Auto Supply Chains

a third of prewar sales. Interestingly, auto part exports Since Russia’s auto supply chains froze in early 2022,
from China to Russia also slumped in early 2022— Russia’s government has pursued three primary strat-
probably because these were Chinese parts used in egies. First, as noted above, it has pressured foreign
Western auto supply chains—though they recov- firms to hand over factories to Russian ownership.
ered quickly. Chinese auto part sales are now Second, it has tried to rebuild component supply
10–20 percent above prewar levels, though this is far chains through government subsidies and Chinese
from enough to make up for the decline in imports help. Third, it has accepted that production volumes
from the West. will be lower and has embraced imports of completed
Imports from other countries are basically cars from a new source: China.
unchanged from prewar averages. Transshipment of Regarding the first strategy, taking control of for-
goods from the West through third countries like Tur- merly Western-owned factories, a number of West-
key and Central Asian nations and on to Russia has ern firms sold their stakes in Russian operations for
occurred in many industries. In the auto industry, it nominal prices with buyback options, leaving open
is not happening at any significant scale. Presumably, the possibility of returning in a few years. In May
this is because it’s too difficult to source all the com- 2022, Renault sold its majority stake in Avtovaz for
ponents a car requires through unreliable gray mar- one ruble to the Russian Central Research and Devel-
kets and complicated supply chains crossing through opment Automobile and Engine Institute (NAMI).
third countries. Moscow’s mayor announced that Renault’s Moscow
A final trend illustrated in the data is that the price plant would reopen to produce Moskvich cars.46 In
of cars produced in Russia collapsed. A typical car October 2022, Ford sold its stake in the Sollers-Ford
produced in 2022 in Russia was around 30 percent joint venture.47 In April 2023, Mercedes-Benz sold
cheaper than usual—not because production was its assets to Avtodom, a Russian luxury dealership
more efficient, but because nearly all amenities were chain, which announced plans to restart produc-
stripped out (Table 2). tion.48 In December 2023, Hyundai announced the

9
ROADBLOCKS AHEAD CHRIS MILLER AND CAROLINE NOWAK

sale of its operations, including two plants in Saint 2023, domestic production for UAZ engines began at
Petersburg, for 10,000 rubles (around $100).49 a metallurgy plant.63
More than a year after halting production, Some of Russia’s auto parts will be produced
Volkswagen sold its Russian operations to local domestically in collaboration with Chinese firms. In
dealership Avilon in May 2023 without a buy- February 2024, Sollers announced it had received a
back option.50 In June 2023, Toyota sold its assets, 1.2 billion ruble loan from the Russian government’s
including a plant in Saint Petersburg, to NAMI with- Industrial Development Fund to produce airbags,
out a buyback option.51 In September 2023, Volvo steering wheels, electronic safety system units, and
transferred its assets to an unidentified Russian seat belts in a joint project with an unnamed Chi-
investor.52 nese partner. Production will not begin until 2025.64
A number of shuttered factories reopened under A Haval engine plant opened in Tula as a joint invest-
Russian brands, though these were often in practice ment project between the Chinese and Russian
assembling Chinese-made cars with Russian names. A governments.65
Lipetsk factory began producing Evolute electric cars To expedite the restarting of domestic car part
in September 2022, putting a Russian label on Chi- production, the Russian government has poured in
nese Dongfeng cars.53 In November 2022, a former money. The Industrial Development Fund allocated
Renault facility in Moscow reopened as a Moskvich 90 billion rubles in 2022–23 for loans to auto enter-
factory, reviving a brand that had not been produced prises. In 2022, a new sector of the fund was launched
in decades, though the cars it produces are nearly for auto components, which issued 78 billion rubles in
identical to Chinese JAC models.54 In May 2023, Rus- loans over the past two years for automotive compo-
sian media announced that a former Sollers-Mazda nent development projects and which plans to issue
plant would reopen as a Sollers joint venture with a 55 billion rubles more in 2024.66
Chinese partner.55 In January 2023, Prime Minister Mikhail Mishustin
Nevertheless, by December 2023—nearly two signed the Strategy for the Development of the Auto-
years after the war began—half of the 22 Russian auto motive Industry in Russia Until 2035, which calls for
factories were reportedly still idle. Reopening and producing a car with up to 80 percent localization.67
rebranding has continued in 2024.56 An Avtotor plant Mishustin reiterated this call in May 2024, ordering
in Kaliningrad announced it would begin produc- that as many components as possible of the Volga C40
ing Chinese Forthings in March 2024, with partial model should be localized.68 In January 2024, the Rus-
localization of some components.57 In March 2024, sian Auto Dealers Association proposed the creation
assembly of Citroën cars began at a former Stellan- of a specialized body to oversee the development of
tis factory using kits manufactured in China.58 The the auto industry, to be named Rosavto.69 There have
same month, production of Russian Solaris cars been no reports on Rosavto since.
began at Hyundai’s former Saint Petersburg plant.59 The auto industry is still far from reestablish-
In May, Aurus limousine production began at the ing its car part production base. A former Nissan
former Toyota plant in Saint Petersburg.60 plant in Saint Petersburg now assembles Xcite cars,
Russia’s second strategy was to localize production extremely similar in design to Chinese Chery models
of car parts that were previously either imported or and assembled from Chinese kits. When asked what
produced in Russia by foreign firms. Some new pro- was Russian about the car, the plant’s director said
duction lines have opened. For example, an automo- “only the soul,” as all the components come from
tive ball bearing plant opened near Moscow in April abroad.70
2023.61 The following month, Sollers began producing Russia’s final strategy has been to fill the gap
diesel engines at a Yelabuga factory it purchased from in production volumes by importing more cars
Ford, having received a 1.7 billion ruble loan from the directly from China. Export data show that China
state Industrial Development Fund.62 In November exported over 800,000 vehicles to Russia in 2023, up

10
ROADBLOCKS AHEAD CHRIS MILLER AND CAROLINE NOWAK

Figure 4: Chinese Car Exports to Russia

900,000
800,000
700,000
Number of Cars

600,000
500,000
400,000
300,000
200,000
100,000
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Note: China exported vehicles to Russia in 2017 but did not report a number of units.
Source: UN Comtrade Database, Trade Data, [Link] This uses the Harmonized System code 8703.

431 percent from 2022 and 1,535 percent from 2019 Complex Manufacturing Supply Chains
(Figure 4).71 Chinese brands dominated car sales amid Geopolitical Disruption
in 2023. While the bestselling brand overall was
Russia’s Lada, Chinese brands made up 48 percent Hardly anyone expected Russia’s auto industry to
of sales—the same as the sales of Russian firms. be one of the greatest victims of Western sanctions.
Western brands constitute 2.4 percent of sales of Many sectors of Russia’s economy that the West
new cars.72 imposed sanctions on proved much more adaptable
By comparison, in 2019, Western brands accounted than Western and Russian policymakers expected.
for 71 percent of sales, Russian brands 27 percent, Russia’s auto industry proved far less capable of adapt-
and Chinese brands just 2 percent.73 At the time, ing. This was a surprise in part because the industry
eight of the top 10 bestselling brands in Russia faced only some direct sanctions and restrictions.
were Western: Kia, Hyundai, Renault, Volkswagen, Certain types of auto and auto part trade remained
Toyota, Skoda, Nissan, and Mercedes-Benz. The legal yet were disrupted anyway.
remaining two were Russian, and no Chinese brand Russia’s military spending has transformed its
ranked among the top 10. Chinese Haval ranked broader industrial base, but the auto industry remains
22nd, selling a mere 0.7 percent of the cars sold in a fraction of its prewar size. Where it has been
Russia that year. By 2023, Haval’s sales increased over restarted, it has relied less on domestic production
800 percent, leaping to be the most popular brand and more on the import of parts from China. Simul-
behind Lada. In 2023, Kia was the only remaining taneous to the Russia-Ukraine war, China has become
Western brand among the top 10 sellers, capturing just the world’s largest exporter of finished vehicles. It
1.3 percent of the market. is also an important exporter of car parts. Russian

11
ROADBLOCKS AHEAD CHRIS MILLER AND CAROLINE NOWAK

consumers are not only buying more finished cars The comparative ease with which commodity mar-
from China. Russian car firms are buying an increas- kets adjusted to Western sanctions on Russia is there-
ingly large number of car parts from China too. In fore not a useful template for understanding how
spring 2024, Mishustin publicly criticized an auto- Chinese auto, machinery, and electronics production
maker for importing even the steering wheels in Volga would adjust to a comparable set of sanctions and
cars from China.74 geopolitical disruptions. Russian car production
For a complex manufactured product like autos, today is around half the prewar level. Moreover,
however, few countries are close to self-sufficient China manufactures around 20 times as much as
in all of the thousands of components. Supply Russia does. If amid a crisis, Chinese complex man-
chains inevitably cross borders. So Russia’s choice— ufactured sectors faced production disruptions as
having ruined its relations with the West by attacking Russian carmakers are experiencing now, the cost to
Ukraine—is whether it prefers to have an auto indus- China would be vastly greater. And the cost wouldn’t
try highly dependent on Chinese components or no be borne by China alone. Unlike Russia’s automak-
major auto industry at all. ers, which sold cars mostly in Russia, China’s indus-
For China, however, the example of the Russian try is the biggest supplier of complex manufactures
auto industry is crucial. Russia mostly exports com- to the rest of the world. We should therefore pre-
modities; its auto sector is an outlier. China, by con- sume that a comparable set of sanctions on China
trast, is the world’s largest manufacturer and exporter would prove hugely disruptive to world manufac-
of complex manufactured goods like cars, electronics, turing output and economically calamitous to both
machinery, and other products with inevitably com- China and the United States.
plex and multinational supply chains.
Many analysts have asked what lessons can be
learned from Western sanctions and Russia’s adap- About the Authors
tations. In terms of understanding China’s vulner-
abilities, the fate of Russia’s commodity sectors Chris Miller is a nonresident senior fellow at the
like oil and metals provides only limited insight. A American Enterprise Institute, where he focuses on
tanker of refined oil products can be sent to custom- Russian foreign policy, politics, and economics; Rus-
ers in many countries. A gearbox for a Volkswagen sia and Ukraine; Russian-European relations; and
won’t easily fit in a Ford. Nor are many of the other Eurasia. He also focuses on semiconductors and the
18,000 parts in a car easily interchangeable. The geopolitics of technology.
same is true for parts in phones, computers, and
industrial equipment—all of which China manufac- Caroline Nowak is a research associate to Chris
tures in large volumes. Miller at the American Enterprise Institute, focusing
on Russian studies and foreign policy.

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ROADBLOCKS AHEAD CHRIS MILLER AND CAROLINE NOWAK

Notes
1. Rosstat, Promyshlennoye Proizvodstvo v Rossii [Industrial Production in Russia], 2023, [Link]
Prom_proiz-vo_2023.pdf.
2. Matthias Prystav, “De-Risking Supply Chains: A Deep Dive into the Automotive Industry,” Swiss Re, February 22, 2023, https://
[Link]/risk-knowledge/building-societal-resilience/[Link].
3. Some sanctions were imposed on luxury autos, a small share of the market, as discussed below.
4. Redaktsiya The Bell, “Kontrafaktnyy Citroen i kitayskaya ‘Volga’. Novyy rossiyskiy avtoprom: mashiny i tseny” [Counterfeit
Citroen and Chinese “Volga.” The New Russian Automobile Industry: Cars and Prices], June 13, 2024, [Link]
kontrafaktnyy-citroen-i-kitayskaya-volga-novyy-rossiyskiy-avtoprom-mashiny-i-tseny.
5. Redaktsiya The Bell, “Kontrafaktnyy Citroen i kitayskaya ‘Volga’” [Counterfeit Citroen and Chinese “Volga”].
6. Igor Gurkov and Michael J. Morley, “Looking in the Rear-View Mirror—a 35 Year Retrospective on the Russian Automotive
Industry,” Thunderbird International Business Review 63, no. 6 (November/December 2021): 4, [Link]
10.1002/tie.22197.
7. Gurkov and Morley, “Looking in the Rear-View Mirror,” 4.
8. Gurkov and Morley, “Looking in the Rear-View Mirror,” 5.
9. United Press International, “Fiat to Invest $850 Million in Russia,” September 29, 1997, [Link]
Fiat-to-invest-850-million-in-Russia/7833875505600.
10. BBC News, “BMW Plans Russian Investment,” March 17, 1999, [Link]
11. Deseret News, “GM Agrees to Form Joint Venture with Russian Company AvtoVAZ,” February 27, 2001, [Link]
com/2001/2/27/19572053/gm-agrees-to-form-joint-venture-with-russian-company-avtovaz.
12. John Daniszewski, “Ford Motor Co. Starts Up Its Own Plant in Russia,” Los Angeles Times, July 10, 2002, [Link]
com/archives/[Link]; and Just Auto, “Russia: Toyota to Launch Production at Its Russian Factory
Q4 2007,” September 15, 2005, [Link]
13. NBC News, “Volkswagen, GM to Build Cars in Russia,” May 29, 2006, [Link]
14. Kim Da-ye, “Hyundai Motor Opens First Plant in Russia,” Korea Times, September 24, 2010, [Link]
tech/2024/06/129_73428.html.
15. Gurkov and Morley, “Looking in the Rear-View Mirror,” 7.
16. Just Auto, “Russia: Johnson Controls Picks Seat Parts Joint Venture Partner,” March 14, 2006, [Link]
russia-johnson-controls-picks-seat-parts-joint-venture-partner.
17. Reuters, “Russian Car Maker Forms Auto-Parts JV with Magna,” August 9, 2007, [Link]
russian-car-maker-forms-auto-parts-jv-with-magna-idUSL18353847.
18. Just Auto, “Russia: ZF Kamaz Venture Expands,” January 24, 2014, [Link]
venture-expands.
19. Continental, “Continental Opens a New High-Tech Production Facility for Engine Components in Russia,” press release, June 5,
2014, [Link]
20. Simon Warburton, “Faurecia Inaugurates Togliatti Seating Site,” Just Auto, July 5, 2021, [Link]
faurecia-inaugurates-togliatti-seating-site.
21 Magna International, 2021 Annual Report, March 3, 2022, [Link]
public-filings/annual-reports/sedar_magna-[Link]?sfvrsn=4324e5c4_8.
22. Nathan Eddy, “Bosch Closes Ukraine Site, Continuously Assesses ‘Volatile Situation,’” Automotive News Europe, March 9, 2022,
[Link]
23. UN Comtrade Database, Trade Data, [Link] This uses the Harmonized System code 8708 for
“motor vehicles; parts and accessories, of headings 8701 to 8705.”

13
ROADBLOCKS AHEAD CHRIS MILLER AND CAROLINE NOWAK

24. US Department of the Treasury, Office of Terrorism and Financial Intelligence, Office of Foreign Assets Control, “Russia-Related
Designations, Designations Updates, and Designations Removals; Issuance of Russia-Related General Licenses,” press release, Septem-
ber 14, 2023, [Link]
25. US Department of the Treasury, “U.S. Treasury Announces Unprecedented & Expansive Sanctions Against Russia, Imposing
Swift and Severe Economic Costs,” press release, February 24, 2022, [Link] White
House, “Joint Statement on Further Restrictive Economic Measures,” February 26, 2022, [Link]
statements-releases/2022/02/26/joint-statement-on-further-restrictive-economic-measures; US Department of the Treasury, “Trea-
sury Prohibits Transactions with Central Bank of Russia and Imposes Sanctions on Key Sources of Russia’s Wealth,” press release, Feb-
ruary 28, 2022, [Link] and Patricia Kowsmann, Laurence Norman, and Ian Talley,
“West Orders Seven Russian Banks off Swift, but Leaves Others On,” Wall Street Journal, March 2, 2022, [Link]
livecoverage/russia-ukraine-latest-news-2022-03-01/card/west-orders-seven-russian-banks-off-swift-but-leaves-others-on-
OMv9TCsZMQqlze9dQQRm.
26. Council of the European Union, “Russia’s Military Aggression Against Ukraine: Fourth EU Package of Sectoral and Individual
Measures,” press release, March 15, 2022, [Link]
aggression-against-ukraine-fourth-eu-package-of-sectoral-and-individual-measures.
27. Kantaro Komiya, “Japan to Ban Russia-Bound Exports of Luxury Cars, Goods from April 5,” Reuters, March 29, 2022,
[Link]
28. US Department of Commerce, Bureau of Industry and Security, “Commerce Restricts the Export of Luxury Goods to Russia and
Belarus and to Russian and Belarusian Oligarchs and Malign Actors in Latest Response to Aggression Against Ukraine,” press release,
March 11, 2022, [Link]
luxury-goods-rule/file.
29. European Commission, “EU Adopts 11th Package of Sanctions Against Russia for Its Continued Illegal War Against
Ukraine,” press release, June 23, 2023, [Link] and Reuters, “Japan to
Extend Car Export Ban to Russia from Aug. 9, Trade Minister Says,” Reuters, July 28, 2023, [Link]
autos-transportation/japan-extend-car-export-ban-russia-aug-9-trade-minister-2023-07-28.
30. Gleb Stolyarov, “Renault to Temporarily Shut Some Russian Operations Due to Components Shortage,” Reuters, February 25,
2022, [Link]
routes-causes-2022-02-25.
31. Joshua Posaner, “Renault Halts Production in Russia After Zelenskyy Rebuke,” Politico, March 23, 2022, [Link]
article/renault-halts-production-in-russia-after-zelenskyy-rebuke.
32. Peter Valdes-Dapena, “GM Stops Exporting Cars to Russia,” CNN, February 28, 2022, [Link]
gm-stop-russia-exports/[Link]; Reuters, “As Sanctions Bite, Volvo Suspends Car Shipments to Russia,” February 28, 2022, https://
[Link]/business/autos-transportation/volvo-cars-suspend-shipments-russia-2022-02-28; and Reuters, “Mitsubishi Motors
Says It May Suspend Car Production, Sales in Russia Due to Sanctions,” February 28, 2022, [Link]
autos-transportation/mitsubishi-motors-may-suspend-car-sales-russia-due-sanctions-jiji-2022-03-01.
33. Reuters, “Daimler Truck Suspends Business Activities in Russia,” February 28, 2022, [Link]
autos-transportation/daimler-truck-suspends-business-activities-russia-2022-02-28.
34. Jasper Jolly, “UK Welcomes Jaguar Land Rover Decision to Pause Russia Exports,” The Guardian, March 1, 2022, [Link]
[Link]/business/2022/mar/01/uk-welcomes-jaguar-land-rover-decision-to-pause-russia-exports; and Ford, “Ford Issues
Statement on Suspension of Russian Joint Venture and Assistance for Ukrainian Refugees,” press release, March 1, 2022, [Link]
[Link]/content/fordmedia/fna/us/en/news/2022/03/01/[Link].
35. Toyota Europe Newsroom, “Toyota Statement on Russian Local Manufacturing and Vehicle Imports,” press release, March 2,
2022, [Link] and Satoshi Sugiyama,
“Honda Suspends Exports to Russia, More Japanese Automakers Could Follow,” Economic Times, March 2, 2022, [Link]

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ROADBLOCKS AHEAD CHRIS MILLER AND CAROLINE NOWAK

[Link]/news/passenger-vehicle/honda-suspends-exports-to-russia-more-japanese-automakers-
could-follow/89954060.
36. Dasl Yoon, “Hyundai Halts Production at Russian Plant but Will Reopen Next Week,” Wall Street Journal, March 2, 2022, https://
[Link]/livecoverage/russia-ukraine-latest-news-2022-03-02/card/hyundai-halts-production-at-russian-plant-but-will-
reopen-next-week-bENlBZ82zByFTbrfw6XY.
37. Nikkei Asia, “Honda and Mazda to Halt Exports to Russia,” March 2, 2022, [Link]
Honda-and-Mazda-to-halt-exports-to-Russia.
38. Volkswagen Group, “Volkswagen Stops Production of Vehicles in Russia and Suspends Export,” press release, March 3, 2022,
[Link]
suspends-export-16813.
39. Reuters, “Nissan Suspends Vehicle Exports to Russia, Expects Production Stoppages,” March 3, 2022, [Link]
article/business/nissan-suspends-vehicle-exports-to-russia-expects-production-stoppages-idUST9N2TW02N; and Reuters, “Nissan
Suspends Production in Russia for First Half of Fiscal Year,” June 28, 2022, [Link]
nissan-suspends-production-russia-first-half-fiscal-year-2022-06-28.
40. Reuters, “Continental Suspends Production, Trade in Russia,” March 8, 2022, [Link]
auto-components/continental-suspends-production-trade-in-russia/90084353.
41. 5Koleso, “AVTOVAZ budet vypuskat’ ‘antikrizisnye’ modeli ogromnymi tirazhami” [Avtovaz Will Produce ‘Anti-Crisis’ Models in
Huge Quantities], April 29, 2022, [Link]
tirazhami.
42. Dmitry Elizarov, “Proizvodstvo uproshchyonnoy ‘Nivy’ mogut snova priostanovit’” [Production of the Simplified ‘Niva’ May
Be Suspended Again], [Link], July 8, 2022, [Link]
budushchem-snova-priostanovit.
43. Tara Patel, “No Airbags or Anti-Lock Brakes on Russian Cars as Sanctions Bite,” Bloomberg, June 15, 2022, [Link]
[Link]/news/articles/2022-06-15/no-airbags-or-anti-lock-brakes-on-russian-cars-as-sanctions-bite.
44. Alexey Morozov, “UAZ pereshel na vypusk vnedorozhnikov bez podushek bezopasnosti i ABS” [UAZ Switched to Producing
SUVs Without Airbags and ABS], [Link], July 7, 2022, [Link]
45. Dmitry Elizarov, “UAZ Patriot lishitsya avtomaticheskoy korobki iz-za sanktsiy” [UAZ Patriot Will Lose Its Automatic Transmis-
sion Due to Sanctions], [Link], June 6, 2022, [Link]
46. Reuters, “Renault Sells Russia’s Avtovaz Stake, but Leaves Room for Return,” May 16, 2022, [Link]
deals/renault-sells-its-stake-russias-avtovaz-option-buy-it-back-2022-05-16.
47. David Shepardson, “Ford to Exit Russia After Joint Venture Stake Sale,” Reuters, October 26, 2022, [Link]
business/autos-transportation/ford-exit-russia-after-jv-stake-sale-2022-10-26.
48. Interfax, “Avtodom Closes Acquisition of Mercedes-Benz’s Russian Assets,” April 25, 2023, [Link]
top-stories/89967/.
49. RIA Novosti, “V Hyundai Motor odobrili prodazhu zavoda v Rossii za desyat’ tysyach rubley” [Hyundai Motor Approved the
Sale of a Plant in Russia for Ten Thousand Rubles], December 19, 2023, [Link] and Reuters,
“Hyundai Finalises Russia Exit as Local Firm Buys Its Two Car Plants,” January 26, 2024, [Link]
transportation/hyundai-finalises-russia-exit-local-firm-buys-its-two-car-plants-2024-01-26.
50. RIA Novosti, “Volkswagen prodal zavod v Kaluge bez optsiona na obratnyy vykup” [Volkswagen Sold Plant in Kaluga Without a
Buyback Option], May 31, 2023, [Link]
51. RIA Novosti, “Manturov rasskazal o prodazhe zavoda Toyota v Peterburge” [Manturov Spoke About the Sale of the Toyota Plant
in Saint Petersburg], June 13, 2023, [Link]
52. Vedomosti, “Manturov: sdelka po prodazhe rossiyskikh aktivov Volvo ne vklyuchala obratnyy optsion” [Manturov: Deal to Sell
Russian Assets of Volvo Did Not Include a Reverse Option], September 25, 2023, [Link]
25/996993-manturov-sdelka-po-prodazhe.

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ROADBLOCKS AHEAD CHRIS MILLER AND CAROLINE NOWAK

53. Lisa Budrina, “V Rossii zapustili proizvodstvo elektromobiley Evolute” [Production of Evolute Electric Vehicles Launched in
Russia], [Link], September 28, 2022, [Link]
54. Gleb Stolyarov and Alexander Marrow, “Russia Revives Soviet-Era Moskvich Brand with Chinese Model,” Reuters, November 24,
2022, [Link]
2022-11-23.
55. RBC, “Zavod ‘Sollers’ vo Vladivostoke perezapustyat s kitayskimi partnerami” [The “Sollers” Plant in Vladivostok Will Be
Restarted with Chinese Partners], May 31, 2023, [Link]
56. Kommersant, “Sanktsionnaya sborka” [Sanctions Assembly], December 22, 2023, [Link]
57. Vedomosti, “‘Avtotor’ nachnet vypuskat’ avtomobili kitayskoy marki Forthing” [“Avtotor” Will Begin Producing Cars of Chinese
Brand Forthing], February 27, 2024, [Link]
58. Reuters, “Russian Company Starts Citroen Production at Former Stellantis Factory,” March 27, 2024, [Link]
business/autos-transportation/russian-company-starts-citroen-production-former-stellantis-factory-2024-03-27.
59. George Nedogibchenko, “AGR nachal otgruzku avtomobiley Solaris na byvshem zavode Hyundai v Peterburge” [AGR Began
Shipping Solaris Cars at the Former Hyundai Plant in Saint Petersburg], Kommersant, March 12, 2024, [Link]
doc/6562606.
60. Reuters, “Russia to Start Production of Putin’s Limousine at a Former Toyota Plant,” May 7, 2024, [Link]
business/autos-transportation/russia-start-production-putins-limousine-former-toyota-plant-2024-05-07.
61. Vedomosti, “Proizvodstvo avtozapchastey otkryvaetsya v Podmoskov’e” [Production of Auto Parts Opens in Moscow Region],
April 21, 2023, [Link]
62. German Kostrinsky, “‘Sollers’ perezapustit proizvodstvo dvigateley v Alabuge” [“Sollers” to Restart Engine Production in Ala-
buga], Vedomosti, June 7, 2023, [Link]
63. Vedomosti, “Novoe proizvodstvo komplektuyushchikh dlya avtomobiley UAZ zapustili v Podmoskov’e” [New Production of
Components for UAZ Cars Was Launched in the Moscow Region], November 28, 2023, [Link]
releases/2023/11/28/novoe-proizvodstvo-komplektuyuschih-dlya-avtomobilei-uaz-zapustili-v-podmoskove.
64. RBC, “‘Sollers’ nachnet proizvodit’ otechestvennye podushki bezopasnosti” [“Sollers” Will Begin Producing Domestic Airbags],
February 20, 2024, [Link]
65. Vedomosti, “V Tul’skoy oblasti nachal rabotu zavod po proizvodstvu dvigateley Haval” [A Plant for Production of Haval Engines
Began Operating in the Tula Region], March 6, 2024, [Link]
proizvodstvu-dvigatelei-haval.
66. Denis Ilyushenkov and Denis Kuznetsov, “V Rossii usilili podderzhku avtokomponentnykh proizvodstv den’gami FRP” [Russia
Has Increased Support for Auto Component Production with Federal Investment Funds], Vedomosti, March 13, 2024, [Link]
[Link]/auto/articles/2024/03/13/1024931-usilili-podderzhku-avtokomponentnih-proizvodstv-frp.
67. Eugene Gerden, “Russia Updates Auto Industry Development Strategy,” WardsAuto, January 23, 2023, [Link]
com/vehicles/russia-updates-auto-industry-development-strategy.
68. Vedomosti, “Mishustin poruchil maksimal’no lokalizovat’ proizvodstvo VOLGA C40” [Mishustin Ordered Maximum Localiza-
tion of VOLGA C40 Production], May 21, 2024, [Link]
lokalizovat.
69. Denis Ilyushenkov, “Dilery predlozhili sozdat’ goskorporatsiyu dlya razvitiya avtoproma” [Dealers Proposed Creating a State
Corporation for the Development of the Auto Industry], Vedomosti, January 19, 2024, [Link]
articles/2024/01/19/1015734-dileri-predlozhili-sozdat-goskorporatsiyu-dlya-razvitiya-avtoproma.
70. Yuri Uryukov, “Importnye detali i usilennyy antikor: kak sobirayut avtomobili Xcite” [Imported Parts and Enhanced Anti-
Corrosion: How Xcite Cars Are Assembled], [Link], June 21, 2024, [Link]
antikor-kak-sobirayut-avtomobili-xcite.
71. UN Comtrade Database, Trade Data. This uses the Harmonized System code 8703 for “motor cars and other motor vehicles;
principally designed for the transport of persons (other than those of heading no. 8702), including station wagons and racing cars.”

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ROADBLOCKS AHEAD CHRIS MILLER AND CAROLINE NOWAK

72. Association of European Businesses, “Year 2023 Ends with 57,8% Car Sales Market Increase*.,” press release, January 11, 2024,
[Link]
73. Association of European Businesses, “Year 2019 Ends with –2,3% Car Sales Market Decrease,” press release, January 14, 2020,
[Link]
74. Liv Martin, “Why Is the Steering Wheel Chinese?! Russian PM Jabs Domestic Carmaker over Foreign Parts,” Politico, May 22,
2024, [Link]

© 2024 by the American Enterprise Institute for Public Policy Research. All rights reserved.
The American Enterprise Institute (AEI) is a nonpartisan, nonprofit, 501(c)(3) educational organization and
does not take institutional positions on any issues. The views expressed here are those of the author(s).

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