Financial Times: Car Exports from Armenia to Russia Increased 200-fold

Although Armenia is not a car producer, but its exports of cars to Russia have soared since last year’s invasion of Ukraine — from $800,000 worth of vehicles in January 2022 to just over $180mn worth of vehicles in the same month this year, a story in The Financial Times says.

“In Russia, all the auto dealerships have closed, BMW, Audi, everything,” the story quotes a young trader as saying.

“Any wealthy person who would have previously gone to a dealership and bought a car, they can’t do that any more,” he added. “So they turn to us, or to someone else, and get the car brought in.”

For Russians, foreign cars are a prized target after the US prohibited all light-vehicle exports to Russia, used or new. The EU also swiftly banned exports of vehicles valued above €50,000 and recently expanded this to include all larger cars with an engine size of about two litres or more.

Many foreign car companies have sold off their production plants and shut dealerships inside Russia. Some have also pulled out of the market even though they are not subject to direct export controls. South Korea’s Hyundai has suspended operations and plans to sell its Russian factories.

Cars arrive primarily from the US via the Black Sea port of Poti in Georgia, brokers and buyers said. Many are then brought to Armenia for customs clearance, as the country shares a customs-free trade bloc with Russia. The city of Gyumri is a key hub from where the vehicles head north to Russia by road, crossing through Georgia again.

In January 2022, before the start of Russia’s invasion of Ukraine, Armenia imported $2.8mn worth of cars from the US. But a year later, that number soared to $29.5mn. Since then, the rate has continued to climb. In April this year, Armenia imported $34mn worth of US cars.