In 2025, the Russian auto market delivered a harsh lesson to two major Chinese automakers, Geely and Changan. After raking in massive profits the previous year, both companies suffered significant losses in 2025, totaling over 15.68 billion rubles—Geely lost approximately 6.2 billion rubles, while Changan fared even worse, with losses reaching about 9.5 billion rubles. This roller-coaster shift has left many wondering how such a lucrative business turned into a massive loss in just one year.
Looking back at 2024, it was a golden year for Chinese automakers in Russia. With Western automakers pulling out due to sanctions, Geely and Changan seized the opportunity, seeing both sales and profits soar. Geely ranked second in sales in Russia, while Changan cracked the top five. Selling cars felt like printing money, with profit margins reaching as high as $3,000 to $5,000 per vehicle. Many believed this boom would last, but by 2025, the situation had drastically changed.
The sharp decline was not due to poor vehicles but rather a combination of harsh Russian policies and a rapidly worsening market environment that squeezed automakers’ profits.
The three most devastating factors were as follows:
First, sky-high interest rates. The Russian central bank kept its benchmark rate at 21%, making car loan rates exorbitant—effectively acting as a form of high-interest lending. Since most Russians buy cars on installment, these rates discouraged potential buyers, cutting demand in half. Unsold inventory piled up, straining cash flow.
Second, the sharp increase in disposal fees (utilization fee) became the straw that broke the camel’s back. Starting in October 2024, Russia raised disposal taxes on imported cars by 70% to 85% in one go, with annual increases of 10% to 20% to follow. For an average 2.0L vehicle, this fee alone reached 668,000 rubles, crushing the price advantage of Chinese cars. Coupled with import tariffs of 20% to 38%, the retail price of Chinese cars in Russia effectively doubled, eliminating their value proposition.
Third, a cliff-like drop in market demand. The combination of high interest rates and high fees made cars too expensive and loans too difficult, leading consumers to simply stop buying. In 2025, new car sales in Russia fell by over 25% year over year. Chinese brand sales also declined, with Geely dropping 44.7% and Changan 39%. Caught between rising costs and falling sales, losses became inevitable.
Additionally, Chinese automakers entered the Russian market with a “quick profit” mindset, relying on vehicle exports without deep localization. Weak after-sales systems, chaotic parts supply chains, and frequent vehicle problems in extreme cold weather gradually tarnished their reputations. These issues were masked during the boom but became glaring when conditions turned tough.
From massive profits in 2024 to a staggering 15.68 billion ruble loss in 2025, Geely and Changan’s experience in Russia serves as a stark warning for all Chinese automakers looking to expand overseas. Foreign markets are never a “guaranteed profit paradise”—policy shifts, economic volatility, and market fluctuations can turn opportunities into traps at any moment. Short-term gains cannot sustain long-term success; only through deep localization, a robust system, and risk resilience can companies establish a solid foothold abroad.
The current Russian auto market is far from the blue ocean it once was. Geely and Changan’s 15.68 billion ruble loss is not just a costly lesson but a warning for the entire industry: overseas expansion carries risks, and caution is essential. Don’t let fleeting gains cloud judgment; steady and thorough strategies are the key to enduring success.
