Automotive component supply-chain stakeholders say they are seeing the disruptions brought by the Russo-Ukraine war on the international industry gradually fading.
Notably, within Russia, the demand for automotive components is catching the attention of many global suppliers.
After the war broke out, many major car manufacturers withdrew from the Russian market. This exodus, combined with an increased need for vehicle maintenance, has significantly boosted the demand for aftermarket (AM) parts and Chinese OEM components.
Russia's booming demand for Chinese parts
As European and American manufacturers left the market, Chinese automakers capitalized on the gap, leading to an increase in Chinese car exports to the region. However, the continued operation of these vehicles on war-torn streets has led Russian officials to seek backup parts from Chinese and Taiwanese AM suppliers.
Over the past two years, the growing demand has allowed some smaller Chinese companies to expand. However, industry players acknowledge that the ongoing uncertainty of the war makes establishing factories in Russia too risky. Moreover, the convenience of land transportation from China makes local manufacturing less attractive in the short term.
Data from Russian automotive market analysis firm Autostat shows that the market share of Chinese brand passenger cars in Russia rose from 19% in 2022 to 51% in 2023, underscoring the growing influence of Chinese vehicles. The firm predicts that 30 to 45 new Chinese car models will enter the Russian market in 2024, with an estimated sales volume of around 1.2 million vehicles, accounting for 80% of the market share.
Russia eyes Chinese EVs
Despite the ongoing conflict, the Russian market remains enthusiastic about smart and electric vehicles, with models like Xiaomi's SU7 appearing on the streets through parallel imports.
According to Reuters, Chinese electric vehicles now comprise over 50% of EV sales in Russia, with Zeekr, a high-end brand from Zhejiang Geely Holding Group, leading the charge.
Given Taiwan's increasing role in supplying Chinese manufacturers through its Tier 2 automotive supply chain, these firms are approaching the Russian market with caution. They are concerned not only about the uncertainties brought by the war but also about the potential misuse of their components in military vehicles, which could lead to unintended consequences.
