Chinese Cars Won’t Affect Russia’s Lube Market


Chinese Cars Won’t Affect Russia’s Lube Market
Chinese car manufacturer Haval's cars on display in a showroom at a dealership in Cheboksary, Russia. © KELENY

Russia imported 227,000 passenger cars in the first half of 2023 – more than tripling the amount in the same period last year – and around 75% came from Chinese suppliers, but this won’t affect the country’s automotive lubricant market, according to an industry analyst.

Because of the Russian invasion of Ukraine and exit of global carmakers from the market, the country’s passenger car and light commercial vehicle sales collapsed to 687,370 units in 2022, down 59% from 1.6 million units in 2021, according to the Association of European Business in Russia. The industry is reeling from the Western sanctions, and the market is stagnating – while car imports rise, domestic production is slumping.

Chinese car brands actively penetrate the market, filling the void left by the exit of the Western brands, but their share in Russia’s on-road vehicle fleet is not large enough to affect the country’s automotive lubricant market, said Viktor Pushkarev, senior analyst in Autostat, a Moscow-based consultancy in the automotive sector.

Russia’s active passenger car fleet amounted to about 45 million units in 2022, the consultancy found.

“Yes, a dynamic sale of Chinese cars is going on right now in Russia, but the total share of the Chinese cars in the country’s active vehicle fleet is still relatively small,” Pushkarev told Lube Report on Tuesday.

The consultancy estimates that the Chinese car brands constitute around 2.5% of the total active passenger car fleet in Russia. The analyst expects Chinese brand passenger cars to be added in the Russian active car fleet at a rate of 0.3% to 0.5% annually in the next few years.

“However, it is too early to say how this would influence the country’s lubricant demand,” he said. “We can assume that oils made under API specification will be more in demand compared to those made under ACEA specs.”

The American Petroleum Institute and the European Automobile Manufacturers Association regularly update the engine oil specifications for the latest models of cars, reflecting the high standards of the Western industry and regulators for better fuel economy and reduced emissions.

Pushkarev said that the engine oils with API specifications would be more in demand in Russia because “from the beginning [of the development of the Russian lubricant industry in the 1990s], the leading Russian lubricant makers have always been oriented towards formulating oils with API specs.”

Similarly, since the rise of the Chinese automotive industry – China is the leading global car market and car exporter – the country’s numerous car makers are significantly influenced by American engine design and technology and API engine oil specifications.

China exported more vehicles to Russia, its larger Western neighbor, than anywhere else from January to May 2023, according to the China Association of Automobile Manufacturers, Autostat said in a recent report.

Russia imported 287,000 new passenger car and light commercial vehicles from China in the first five months of this year, almost double of that of Chinese cars imported into Mexico – the next highest and last year the top importer of Chinese cars. The Latin American country imported 159,000 automobiles from China in the first five months of 2023. It was followed by Belgium, which imported 120,000 units. This Western European country is an import hub for the Chinese cars in the region. Belgium was followed by Australia, with 101,000 units imported, and Great Britain, which imported 90,000 vehicles from China.

According to the Association of European Business in Russia, the best-selling foreign brands in the country are China’s Chery and Haval.

Also, another sign that Chinese models increasingly replace the western car brands is that the number of dealerships that sell Chinese car brands in Russia more than doubled last year. Last year 487 new Chinese vehicle dealerships opened in the country, bringing the total number to 1,000, according to Autostat.

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