Russia may ban car imports if new sanctions apply over Ukraine

Russia may tighten retaliatory sanctions against western nations to include a ban on car imports if the US and the EU impose additional sanctions on Moscow, daily newspaper Vedomosti reported yesterday.

The impact of the measure on many foreign auto-makers would be softened because their factories inside Russia would not be affected, but some high-end brands, such as Mercedes-Benz, could be more vulnerable as their models have to be imported.

The West accuses Russia of arming separatist rebels in Ukraine, an allegation Moscow denies. Western governments imposed sanctions on Moscow, including on its financial and energy sectors, and Russia has already hit back by stopping imports of many foods.

Announcing the food bans on August 7th, prime minister Dmitry Medvedev said the government was also considering protective measures in aircraft, shipbuilding and automotive industries, without specifying the scope of any possible sanctions.

"We are seriously concerned. We hope that the Russian government will think twice before taking any such measures as they would hurt all manufacturers," said Joerg Schreiber, chairman of the Association of European Businesses' Automobile Manufacturers Committee.

Import duties

He said the impact of any sanctions would depend on whether the government banned imports of built cars or both cars and components, or raised import duties.

Vedomosti reported that a ban on vehicle imports had been among proposals put before Russian president Vladimir Putin, who rejected the idea and ordered a ban on food imports only. However it said car import restrictions remained an option in the event that western nations extend sanctions on Russia.

Russia’s industry ministry had no immediate comment.

Imports accounted for 27 per cent of passenger car sales in the first half of 2014, while for trucks and buses the proportion was 46 per cent and 13 per cent respectively.

Foreign car-makers have invested $5 billion in local production in Russia since the mid-2000s. The government encouraged the trend by raising car import duties and lowering tariffs on parts. – (Reuters)