Chery has dropped the plan to begin car production at the UAZ plant facilities, which belong to the Sollers Auto group. According to Vedomosti, the snag is UAZ’s inclusion on the EU sanctions list since early June, a move that could expose Chery to secondary sanctions through partnership. That reality pushes the company to consider alternative routes rather than a direct rollout with the sanctioned site.
Nevertheless, the Chinese automaker still holds two viable paths to bring its vehicles to the Russian market. The first option involves joining forces with another Sollers Auto entity that isn’t subject to sanctions. A potential site for such collaboration could be a factory in Vladivostok, where production could continue with a partner that remains in good standing with sanctions regimes. This approach would allow Chery to leverage existing manufacturing capacity while reducing exposure to sanction-related risk.
The second path under consideration is acquiring a plant from a foreign carmaker that has already exited Russia. One widely discussed scenario mentioned a Mercedes-Benz facility in the Moscow region being offered for sale. If this route materializes, a Chinese automaker could gain a ready-made production footprint and accelerate market entry, though it would bring its own governance and integration challenges post-acquisition.
In the Russian market, Chery’s performance for the first seven months of 2022 tallied 15,387 vehicle sales. That figure reflected a 23.7% drop from the same period in 2021, yet it is notable alongside a broader industry downturn of about 74.9%. This combination indicates a relative gain in market share for the Chinese brand within a contracting market, underscoring how competitive positioning can shift even as overall demand wanes. Market dynamics in subsequent years have continued to evolve, with the manufacturer’s strategy adapting to sanctions, supply-chain constraints, and consumer sentiment in both Russia and neighbouring markets. In this environment, the choice between leveraging an existing manufacturing base through a non-sanctioned partner or acquiring a production site from a departing automaker could be pivotal for Chery’s regional ambitions, determining not only production throughput but also the speed at which new models can reach showrooms and customers. While the first option offers a safer immediate pathway, it may require navigating internal corporate approvals, cross-border logistics, and alignment with local regulations. The second option promises a faster scale-up if the integration is smooth, yet it demands careful assessment of legal, financial, and operational implications, including repurposing facilities, labor agreements, and compliance with sanctions regimes. In both scenarios, the focus remains on balancing risk with strategic access to manufacturing capacity, as well as leveraging Chery’s broader international image to drive sales in a market that has seen rapid shifts in supply chains and consumer preferences. The company’s long-term plan likely hinges on a combination of leveraging regional partnerships, maintaining flexibility in plant utilization, and pursuing efficiency improvements across the supply chain to sustain competitiveness in the North American and Canadian markets as well. The evolving regulatory landscape, currency considerations, and evolving consumer expectations will continue to shape how Chery cultivates a sustainable presence in Russia while safeguarding its global operations. The outcome of these strategic options will determine not only production continuity but also how effectively the brand can capitalize on emerging opportunities in a challenging yet potentially rewarding market environment.