A Chinese automaker has taken over Russian plants abandoned by Volkswagen and Mercedes

• Chinese automaker Chery is using Russian plants once owned by Western firms, Reuters reported.
• These factories were abandoned by firms such as Volkswagen and Mercedes after Russia invaded Ukraine.

Chinese automaker Chery has reportedly started manufacturing vehicles in three Russian plants that once belonged to Western firms, five people familiar with the matter told told Reuters.

The use of these factories — previously owned by companies like Volkswagen and Mercedes — shines a light on what is happening to Western assets left behind since Russia's invasion of Ukraine in 2022.

These carmakers were among a throng of Western firms left with little choice but to abandon resources in the country, despite decades spent building up supply chains. As multinational companies cut ties with Russia over its military incursion, Moscow introduced legislation allowing for asset seizure and discounted sales.

Continuing operations were also made difficult by a mass of sanctions the US and its allies layered on Russia.

Volkswagen, for instance, sold its assets to local firm Avilon in 2023 under a government-sanctioned deal. Mercedes completed its withdrawal that same year, selling shares of its subsidiaries to the local investor Avtodom.

Collectively, these deals included two plants that are now producing Chery vehicles over a year later, Reuters reported. One will produce 27,000 vehicles this year, a source told the outlet.

Chery's operations add up amid China's efforts to bolster economic ties with Russia.

While Washington has worked to ostracize Moscow from the global economy, Chinese firms have filled the gap. Trade between the two countries ballooned to $240 billion last year, while Chinese exports into Russia jumped 121% between 2021 and early 2024, according to think tank data.

The pattern especially holds true for Chinese car products.

Russian demand made China the world's top car exporter at the start of this year, and Beijing is responsible for over half of Russia's car market in terms of sales, Reuters reported.

Chery is China's largest exporter and accounts for close to a fifth of Russian passenger car sales. It sold over 200,000 new cars in Russia in 2023, a quadrupling from the previous year.

Sources told the outlet that the firm is expanding production into Russia on a bet that demand will remain strong. They told Reuters that Moscow's economy struggles with output and has failed to take advantage of its full production capacity.