How a British-made car found its way into Russian showrooms

Even after the invasion of Ukraine and the imposition of sanctions, British carmakers appear to have continued to sell hundreds of millions of pounds of luxury cars to Russia and export them indirectly through former Soviet countries, Sky News analysis shows.

Although British cars are exported directly to Russia Reduced to zero after the invasion Ukraine By 2022, this collapse will be followed by a corresponding increase in car exports to Russia’s neighbors, especially Azerbaijan.

Our analysis of official HMRC trade data found that the UK exported £273m of cars to Azerbaijan last year, an increase of 1,860% compared to the five years before the invasion.

Not only is the increase in exports to Azerbaijan unprecedented, it is also comparable to annual car exports to Russia in the two years before sanctions were imposed, which averaged £330m.

As well as HMRC statistics, Sky News also analyzed United Nations international trade data, which showed that during the same period when UK car exports to Azerbaijan saw unprecedented growth, Azerbaijani car exports to Russia also saw unprecedented growth. increase.

The data matches the testimony of Sky sources, who tell us that while Russian car buyers sourcing German cars mainly ship via Kyrgyzstan, they prefer to use Azerbaijan as a route for British cars.

British carmakers insist they will no longer sell cars to Russia. Government data collected by HMRC on all goods leaving the country does not prove the cars ended up in Russia. Once UK goods leave a port, especially once they reach a third country, it is impossible to track them.

However, the government is concerned about this gray area where goods could be shipped to Russia via former Soviet satellite states in the Caucasus and Central Asia.

Cars are among the items banned from entering Russia under the so-called “dual-use” sanctions regime. The sale of luxury cars worth more than £42,000 to Russia is specifically prohibited.

The HMRC database also shows the number of cars sold, as well as their total value, showing that the average value of UK exports to Azerbaijan is over £100,000, suggesting the goods are mainly or entirely luxury cars.

UK car lobby group SMMT said: “British car manufacturers are committed to full compliance with all current and future trade sanctions.

“While trade flows are likely to vary, and do tend to be quite volatile as economies grow, there is no existing evidence of a lack of compliance with existing sanctions, but manufacturers will remain vigilant and will condemn any A party that commits to complying with existing sanctions. Risk.”

Sanctions experts say part of the challenge in combating the flow of goods to Russia via third countries, as happened in this case, is that once those goods enter other countries, they can be difficult and sometimes almost impossible to track.

Tom Keatinge, director of the Financial Crime and Security Research Center at the Royal United Services Institute, said: “There are obviously very close economic links between places like Azerbaijan, Armenia and Russia, and they are in some sort of common economic area. So it does.” Once the goods arrive in this area, your tracking capabilities as a UK manufacturer are lost.

“Certainly when it comes to exporting cars or anything that might happen initially, you should ask yourself: ‘Do I really think this exporter who comes out of nowhere to buy 100 cars is actually just importing cars into a third country? ?Or maybe they’re trying to make money by circumventing sanctions and selling it to Russia?”

BMW’s Rolls-Royce said: “Rolls-Royce Motor Cars stopped producing and supplying cars to the Russian market in late February 2022, before international trade sanctions were implemented. At the same time, governments have implemented far-reaching sanctions, we fully comply with and support them.

“Retail sales of automobiles to customers is managed by our global dealer network, which is composed of independently owned and operated businesses. Our global dealer network is contractually obligated to comply with all applicable national and international laws and regulations, including those related to export Control relevant laws and regulations.

“If any new Rolls-Royce cars have been imported into Russia since late February 2022, this has been done without the knowledge or support of Rolls-Royce Cars.”

A representative for Volkswagen’s Bentley said: “We are committed to fully complying with all current and future trade sanctions and there is no evidence that we are not complying with existing sanctions or that sales trends in Azerbaijan have actually changed. “

While the HMRC data does not identify specific car manufacturers or goods, it does show that the port most commonly used for this particular trade in the UK is the Port of Bristol, which previously exported 10% of goods to the UK each year. Not exceeding millions of pounds. Azerbaijan. In the two years after the invasion, exports soared to more than £100 million a year. The Port of Bristol did not respond to Sky News’ request for comment.

For the UK as a whole, a significant increase in car exports to Azerbaijan stands out in the trade statistics. Within a few years, the country with a population of 10 million and a GDP the size of Ghana has become the UK automotive industry’s 16th largest export destination by value, ahead of Austria, Portugal and Sweden.

Sky News previously reported that Many other prohibited itemsWeapons, including those known to have been repurposed as weapons, have been sent to former Soviet states in the Caucasus and Central Asia, including Kyrgyzstan and Armenia. Exports to Russia from these countries have increased significantly.

UK sanctions minister Anne-Marie Trevelyan said: “Continued efforts by investigative journalists and NGOs to highlight evasive behavior are an important part of our collective efforts to track and evidence Putin’s heinous crimes. .

“We have imposed the largest and toughest package of sanctions ever against Russia or any major economy with 2,000 individuals and entities under the Russian regime. Together with our international allies, we have made clear that no country should support Russia’s war machine.

“We continue to crack down on those doing business with Putin and his associates, including sanctioning individuals who seek to circumvent our sanctions, and working with partners and a range of third countries to stem the flow of goods into Russia.”