Russia may be under heavy sanctions because of its actions in the Ukraine a move no doubt influenced by the USA. But when it comes to economic barriers nothing stands in the way when money is involved and those barriers are easily hurdled.
The Russian economy is fragile at best but full of sales potential however most manufactures are nervously looking over their shoulders as economic sanctions slowly begin their long death twist.
BMW is still carrying on regardless and is adding production of the X4 SUV in Russia shipped from kits made in the USA. The irony couldn’t be more obvious, two countries at war politically and economically are still trading albeit via a third party.
BMW has a production partner with Avtotor in Kaliningrad and already supplies kits for several other models. BMW were planning to build its own production plant but halted the decision to do so.
The economic sanctions has plunged Russia into a state of uncertainty, new car sales are down by 38%, BMW was hit by a 20% fall in demand. Russia is an oil producing nation but prices have fallen and a weak currency has caused further uncertainty.
Premium brands like BMW are still selling, there are plenty of wealthy Russians able to afford luxury products. Avtotor currently builds the 3, 5 and 7 Series along with the X1, X3, X5 and X6 SUV’s.
In contrast the big volume producers are faring worst of all, VW, GM and Ford are all reducing production at their Russian based facilities.