Automotive company Chery, based in China, abandons the Russian market due to imposed sanctions.
Chinese automaker Chery Automobile has announced its plans to go public on the Hong Kong Stock Exchange, aiming to raise $1.2 billion. This decision comes as the company prepares to exit the Russian market, a move that has been described as a major turnaround by senior analyst Gregor Sebastian of Rhodium Group.
The exit from the Russian market is not unexpected, given the challenging business environment in the country. Chery, which has 372 dealership outlets and 687 showrooms in Russia, has been grappling with new disposal fees imposed by Moscow on imported vehicles and the impact of Western sanctions.
Russia is Chery's second-largest market after China, with the company selling nearly 325,200 vehicles in Russia in 2024, accounting for one in every five cars sold in the country that year. Russia accounted for 25.5% of Chery's total revenue in 2024, and 17.7% in 2023.
The funds raised by Chery will be used to expand its lineup of electric and hybrid vehicles, as well as for international expansion. Another 20% of the proceeds will go towards this international expansion.
The decision to sell vehicles in the European Union is seen as more advantageous due to the business environment in the region. Since Chery does not assemble cars in Russia, the new tariffs make the local business unprofitable.
The reduction in the number of brands and sales channels is part of Chery's overall strategy to streamline its operations. The company plans to gradually reduce the number of brands and sales channels in Russia, aiming to make Russia's contribution to revenue insignificant.
Chery Automobile has begun winding down its presence in Russia, with its subsidiary transferring assets to three unnamed companies in April 2025. The exact timing of the complete exit from the Russian market is not publicly specified as of now, but it is expected to be fully completed by 2027.
The decision to leave the Russian market was driven by both Western sanctions and new disposal fees imposed by Moscow on imported vehicles. The reduction in the number of foreign car models appearing on the Russian market in 2025, with only about 20 new models appearing compared to five times more in the same period in 2024, is a testament to the challenges faced by automakers in the region.
Despite these challenges, Gregor Sebastian sees the decision to leave the Russian market as wise, as it will likely be beneficial in the long term. Chery plans to release more than eight new models, signalling its commitment to innovation and growth. The company's plans to go public on the Hong Kong Stock Exchange is a testament to its ambition and its confidence in its future.
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