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The exorbitant cost of new Chinese cars in Russia, which has long since become banal, was the result of the toothless economic policies of the Russian authorities and
Over the past quarter, the dollar has appreciated by no less than 22% against the ruble. It was followed by prices for new Chinese cars. Like, the objective reason is the same: the economy, the exchange rate, and all that… But on closer inspection, the situation doesn’t seem so straightforward. The fact is that the Chinese are not fools and have long understood that in the Russian car market you can now earn as much from the sale of any car as a car dealer in China could not have dreamed of.
To do this, they just need to carefully maintain the old tradition – to conclude agreements with Russian counterparts in dollars. Mutual arrangements can then even be carried out in Afghan or Tugriks. Although now it is usually done in yuan. But the main thing is that there should be dollars in the text of the contract. Now let’s explain why.
Smart people already understood in the spring and summer of last year that it would be possible to raise serious money for miracles with the exchange rate of the dollar. The rise of the ruble to the level of 60 per dollar did not last long. The Russian Central Bank, as well as importers of goods to Russia, actively fought against it. They have diligently set out new routes for the supply of all kinds of products to our country and have now actually restored the volumes that took place at the beginning of 2022. That is, ours are now bought abroad for about the same foreign currency amounts as before, and even a little more.
And the inflow of the same currency into Russia fell catastrophically due to the fall in export prices for our energy resources. That’s how the dollar has risen in recent years. Much to the delight of Russian budget keepers. And importers of Chinese cars turned out to be in the dark. In rubles, they now earn much more.
Do you remember the ruble’s fall against the dollar by 22% since the beginning of the year? Meanwhile, the exchange rate of the yuan against the dollar has not changed significantly over the same period. Therefore, when settling accounts with the Chinese, we now actually pay them much more rubles and more yuan – in accordance with the peg to the dollar prescribed in the contracts. But since the yuan has not really depreciated against the dollar, the Chinese are now making super profits trading cars in Russia.
The Russian market is also hugely valuable to Chinese manufacturers because they now have a monstrous overproduction of cars. They just don’t know what to do with the order of several million brand new cars. Local dealers are waging a fierce price war in China, as a result of which the retail prices of dozens of models have fallen by one and a half to two times.
Against the background of such almost minimal earnings in the domestic market, the crazy margin on trade in Russia seems to them a celebration of life and success.
This style of economic “communication” with the Chinese (and not just with them!) will continue as long as the Russian authorities maintain dollar-denominated settlements for the export of domestic oil, gas and other commodities. This is useful for filling the budget: if the ruble collapsed against the dollar, they immediately (on paper) received an additional increase in the ruble from the sale of foreign exchange earnings by exporters. But the real economy is not improving.
And so that, for example, car prices do not creep up after the dollar exchange rate, one government decision is sufficient. That would prohibit companies not involved in international trade in Russian raw materials from even mentioning dollars or euros in export-import contracts. Let’s say from January 1, 2024. Yes, initially there will be a little horror horror in foreign trade. Approximately in the spring of 2022. But then everything will get better soon, the company will adapt and rebuild. After that, the dollar exchange rate, which has now become toxic to us, will no longer be a loophole for Chinese car brands to make super profits in our market.
Over the past quarter, the dollar has appreciated by no less than 22% against the ruble. It was followed by prices for new Chinese cars. Like, the objective reason is the same: the economy, the exchange rate, and all that… But on closer inspection, the situation doesn’t seem so straightforward. The fact is that the Chinese are not fools and have long understood that in the Russian car market you can now earn as much from the sale of any car as a car dealer in China could not have dreamed of.
To do this, they just need to carefully maintain the old tradition – to conclude agreements with Russian counterparts in dollars. Mutual arrangements can then even be carried out in Afghan or Tugriks. Although now it is usually done in yuan. But the main thing is that there should be dollars in the text of the contract. Now let’s explain why.
Smart people already understood in the spring and summer of last year that it would be possible to raise serious money for miracles with the exchange rate of the dollar. The rise of the ruble to the level of 60 per dollar did not last long. The Russian Central Bank, as well as importers of goods to Russia, actively fought against it. They have diligently set out new routes for the supply of all kinds of products to our country and have now actually restored the volumes that took place at the beginning of 2022. That is, ours are now bought abroad for about the same foreign currency amounts as before, and even a little more.
And the inflow of the same currency into Russia fell catastrophically due to the fall in export prices for our energy resources. That’s how the dollar has risen in recent years. Much to the delight of Russian budget keepers. And importers of Chinese cars turned out to be in the dark. In rubles, they now earn much more.
Do you remember the ruble’s fall against the dollar by 22% since the beginning of the year? Meanwhile, the exchange rate of the yuan against the dollar has not changed significantly over the same period. Therefore, when settling accounts with the Chinese, we now actually pay them much more rubles and more yuan – in accordance with the peg to the dollar prescribed in the contracts. But since the yuan has not really depreciated against the dollar, the Chinese are now making super profits trading cars in Russia.
The Russian market is also hugely valuable to Chinese manufacturers because they now have a monstrous overproduction of cars. They just don’t know what to do with the order of several million brand new cars. Local dealers are waging a fierce price war in China, as a result of which the retail prices of dozens of models have fallen by one and a half to two times.
Against the background of such almost minimal earnings in the domestic market, the crazy margin on trade in Russia seems to them a celebration of life and success.
This style of economic “communication” with the Chinese (and not just with them!) will continue as long as the Russian authorities maintain dollar-denominated settlements for the export of domestic oil, gas and other commodities. This is useful for filling the budget: if the ruble collapsed against the dollar, they immediately (on paper) received an additional increase in the ruble from the sale of foreign exchange earnings by exporters. But the real economy is not improving.
And so that, for example, car prices do not creep up after the dollar exchange rate, one government decision is sufficient. That would prohibit companies not involved in international trade in Russian raw materials from even mentioning dollars or euros in export-import contracts. Let’s say from January 1, 2024. Yes, initially there will be a little horror horror in foreign trade. Approximately in the spring of 2022. But then everything will get better soon, the company will adapt and rebuild. After that, the dollar exchange rate, which has now become toxic to us, will no longer be a loophole for Chinese car brands to make super profits in our market.
Source: Avto Vzglyad
Donald Salinas is an experienced automobile journalist and writer for Div Bracket. He brings his readers the latest news and developments from the world of automobiles, offering a unique and knowledgeable perspective on the latest trends and innovations in the automotive industry.
