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Sanctions have no effect – this is how Russians get their cars

2024-02-21T04:15:42.783Z

Highlights: Sanctions have no effect – this is how Russians get their cars. Most new cars sold in Russia come from China, but many of them take the detour via Kyrgyzstan. WirtschaftsWoche speculates that this detour could be due to the low import tariffs, but could also be a strategy to conceal relationships with Russia. In 2014, the country joined forces with Russia, Armenia, Belarus and Kazakhstan to form the Eurasian Economic Union, an internal market for the free movement of people and goods.



As of: February 21, 2024, 4:48 a.m

By: Markus Hofstetter

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Press

Split

Despite sanctions, Russians can buy BMW or Mercedes cars.

One country particularly stands out as a stopover for vehicles.

Bishkek/Munich - The EU and many other countries have imposed sanctions on Russia because of Vladimir Putin's war of aggression against Ukraine.

Nevertheless, a striking number of Western goods enter the country.

Countries such as Turkey and former Soviet republics such as Armenia, Uzbekistan and Kyrgyzstan are hubs for circumventing sanctions.

Everything that is needed is delivered, including goods for armaments production.

This is how Russians get their cars: Car exports to Kyrgyzstan have exploded

Cars from the West are also a popular commodity in Russia, especially German models from BMW, Mercedes and Audi.

Figures published on X by economic researcher Robin Brooks from the Institute of International Finance in Washington show what dimensions these are.

After that, German exports of cars and spare parts to Kyrgyzstan exploded by 5,500 percent.

The increase to Kazakhstan is 720 percent, to Armenia 450 percent and to Georgia 340 percent.

“All of this is delivered to Moscow, where Putin’s cronies love their G-Class,” says Brooks, commenting on the figures.

A transshipment point for the vehicles is a car bazaar near the Kyrgyz capital Bishkek, as

WirtschaftsWoche

reports.

Not only cars from German manufacturers are traded here, but also from China, South Korea and Canada.

A trader says business has been booming since the start of the war.

He buys expensive used cars from a middleman friend in Giessen, which is transported by truck to Kyrgyzstan via Latvia, Belarus, Russia and Kazakhstan in five to ten days.

This is how the Russians get their cars: Many vehicles are “lost” on the way to Kyrgyzstan

According to WirtschaftsWoche

, experts

assume that a large proportion of these goods are simply dumped in Russia.

This is despite the fact that exporters have to sign export ban clauses when leaving the Schengen area.

All that is needed is corrupt customs officers to issue the relevant notices.

A used car market in Bishkek, Kyrgyzstan (archive photo) © Pond5 Images/imago

Even cars that have actually arrived in Kyrgyzstan can be exported to Russia relatively easily.

In 2014, the country joined forces with Russia, Armenia, Belarus and Kazakhstan to form the Eurasian Economic Union, an internal market for the free movement of people and goods.

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This is how Russians get their cars: Moscow is a thorn in the side of dealers' high margins

A dealer explains to WirtschaftsWoche

how this works

based on a current deal.

He received a request on his cell phone from Krasnodar, Russia.

We are looking for a new Hyundai Genesis with special equipment for around $62,000.

Now he is looking for another dealer at the car bazaar who will sell the car for $45,000.

The rest is his profit minus import tax in Russia and transport to the buyer.

There are special Telegram channels for transport where drivers offer routes and free places.

A trip from Bishkek to Tula, which is around 3,700 kilometers, costs $1,200.

But the Russian state seems to have something against the lucrative business.

According to

WirtschaftsWoche,

there are rumors about a possible end to these parallel imports, i.e. imports that are not authorized by the manufacturer of the goods.

With ever new regulations and higher import duties, Moscow is trying to minimize the high margins for traders.

This is how the Russians get their cars: Chinese manufacturers take a detour via Kyrgyzstan

Most new cars sold in Russia come from China.

But many of them take the detour via Kyrgyzstan, including via the car bazaar near Bishkek.

WirtschaftsWoche speculates

that

this detour could be due to the low Asian import tariffs, but could also be a business strategy.

Chinese manufacturers use countries like Kyrgyzstan as a cover to conceal direct trade relationships with Russia.

In this way they want to maintain market access to the West.

Source: merkur

All news articles on 2024-02-21

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