AUTONEWS

What prompted the German automaker to export 100 vehicles to Russia?

Since 2022, the year in which the Russian army began its attack on Ukraine, the automotive industry (Chinese not included) has stopped exporting to the invading country, closed and sold the factories it owned on Russian soil, and also got rid of its dealerships. But after more than two and a half years without access to European luxury cars, since in Russia new cars are only available from Chinese brands and the local elite tend not to appreciate this type of vehicle, BMW has helped to brighten up some people's Christmas, according to the German press.

The German automaker was caught exporting 100 vehicles to Russia, in violation of the rules of the European Union and the automaker itself, with BMW admitting that, after “inspecting the exported vehicles, it found irregularities and reported the situation to the authorities”. The brand also announced that the vehicles left Germany via the dealership in Hanover, according to the German publication Business Insider.

Ahead of the official investigation that will determine the level of involvement by the manufacturer, BMW stated that “the employees involved have been dismissed”, but it is natural that, with sales of luxury cars falling, especially due to the reduction in Chinese “appetite” for this type of top-of-the-range vehicle, some suspicions will arise. Hence, it is not obvious that this public relations nightmare will not evolve into a hefty fine, if the brand’s involvement is confirmed.

“Grey market”... This case highlights the challenges of enforcing sanctions against Russia, particularly given the rise in so-called parallel imports or “grey markets”. This phenomenon involves using third countries to circumvent restrictions. Some companies and individuals have turned to countries such as Kazakhstan, Kyrgyzstan, Turkey and the United Arab Emirates to move goods to Russia. These nations, which have close trade relations with Moscow and have not adhered to the sanctions, act as convenient transit points. The geographical proximity between Europe and Russia also facilitates such operations.

Another method includes the use of “shadow fleets”, often consisting of old tankers from countries such as Cameroon and Liberia, to transport goods clandestinely.

These alternative routes make it more difficult to manage goods entering and leaving Russia, even as direct exports from Europe have declined. The resistance of some third countries to adhere to the sanctions weakens their impact, which presents the EU with complex dilemmas.

In recent months, products from several companies have been available for purchase in Russia, despite the companies having complied with all applicable sanctions. The BMW Group has implemented measures to prevent such imports.

BMW describes the incidents as "irregularities"... BMW has admitted that these transactions did indeed take place, and has raised concerns about possible violations of EU sanctions. These restrictions were introduced in response to the conflict between Russia and Ukraine, banning the shipment of luxury goods to Russia. Since March 2022, the United States has also applied similar measures, including restrictions on the export of luxury vehicles. The European sanctions cover, among other items, vehicles with engines over 1900 cc, as well as hybrid and electric vehicles, whether new or used. Despite this, BMW has described the incidents as "irregularities" and revealed that those involved were from the Hanover branch. In response, all employees linked to these transactions have been dismissed, and the company has suspended future deliveries to ensure compliance with the sanctions.

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