Oversaturation, tough marketing policy, and poor quality of Chinese vehicles are killing Russians' demand.

The Chinese automobile market in Russia has encountered significant challenges in 2024, with a record number of showroom closures highlighting the difficulty Chinese brands face in establishing a sustainable foothold.

Despite a growing presence overall, driven by ambitious expansion plans, issues related to profitability, high competition, and product quality have hindered their success.

Showroom closures amid expansion

According to data from Gazprombank Autoleasing and AutoBusinessReview, nearly 450 Chinese auto dealerships closed in Russia in 2024, 2.4 times more than the previous year. While the total number of showrooms increased by 19.8% to 2,780, many dealers terminated contracts due to insufficient sales and low profitability.

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Some closures were also driven by Chinese distributors enforcing stricter conditions, such as investment demands for showroom upgrades and sales targets that dealers struggled to meet.

Industry experts attribute the closures to market oversaturation. “Too many Chinese showrooms have been opened - more than the market needs,” Maxim Kadakov, editor-in-chief of Za Rulem, a car magazine, told Kommersant.

Competitive and economic pressures

Despite accounting for 66.9% of the total Russian auto dealership network, Chinese brands face stiff competition and economic hurdles.

A high central bank interest rate, increased recycling fees, a weakening ruble, and rising car prices have dampened the market. Analysts predict a 10% decline in overall new car sales in 2025.

Additionally, brands like Chery, Geely, and Changan, while maintaining growth in their dealership networks, have faced internal disruptions. For instance, Chery saw 28 of its dealers lose their franchises due to unmet sales targets.

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On the other hand, after-sale service for Chinese brands is either poor or inexistent as mechanics have not yet adapted to their models and have few space parts. Customer manuals are in Chinese or English, which can be a problem for most Russians. 

Concerns over quality and safety

Quality issues have further complicated Chinese automakers’ efforts in Russia. Changan, one of the top-selling brands in the market, faces backlash over design flaws in its popular Uni-S, Uni-K, and Uni-T models.

These vehicles reportedly have defective seatbacks, posing a risk of spinal fractures during minor accidents. While sales of these models surged in 2024, safety concerns could jeopardize their future in Russia.

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Industry observers believe the Russian auto market is still evolving, and Chinese manufacturers are yet to determine the optimal scale and strategy for their operations. “The market is in a formative stage, and Chinese producers haven’t settled on the right number of partners. This will likely take another year or two,” commented Andrei Olkhovsky, CEO of Avtodom.

With competition at its peak and economic pressures mounting, the landscape for Chinese automakers in Russia remains uncertain. While some brands have built consumer trust and expanded their presence, others face the prospect of further dealership closures and restructuring in the years ahead.

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