How UK-made cars are finding their way to Russia’s showrooms

Published

1 year ago

March 12, 2024

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British carmakers appear to have continued selling hundreds of millions of pounds of luxury vehicles to Russia even after the invasion of Ukraine and the imposition of sanctions, exporting the cars indirectly via former Soviet states, Sky News analysis suggests.

While direct British car exports to Russia have fallen to zero following the invasion of Ukraine in 2022, that collapse has been followed by a corresponding increase in car exports to countries neighbouring Russia, most notably Azerbaijan.

Our analysis, based on official HMRC trade data, finds that the UK exported £273m of vehicles to Azerbaijan last year, a 1,860% increase compared with the five-year period preceding the invasion.

Not only is the increase in exports to Azerbaijan unprecedented, it is of a similar magnitude to the annual car exports to Russia in the two years before the imposition of sanctions, which averaged £330m.

Alongside the UK HMRC statistics, Sky News has analysed UN international trade data which shows that over precisely the same period that Britain recorded an unprecedented increase in car exports to Azerbaijan, Azerbaijan recorded an unprecedented increase in car exports to Russia.

The data chimes with testimony from Sky sources, who told us that while Russian car buyers sourcing German vehicles have primarily sent them via Kyrgyzstan, they prefer to use Azerbaijan as a route for British cars.

British carmakers insist that they are no longer selling cars to Russia. And the government data, collected by the HMRC on all goods leaving the country, do not constitute proof that the cars ended up in Russia. It is impossible to track each British consignment once it has left port, especially once it has arrived at a third country.

However, the government is concerned about this grey area, whereby goods may be sent to Russia via former Soviet satellite states in the Caucasus and central Asia.

Cars are among the items banned from Russia under the so-called “dual use” sanctions regime. There is a specific ban of the sale of luxury cars – those worth more than £42,000 – to Russia.

The HMRC database, which also shows the count of cars sold as well as the total value, reveals that the average value of UK cars exported to Azerbaijan was more than £100,000 – suggesting that the consignments are primarily or exclusively luxury cars.

Britain’s motoring lobby group the SMMT said: “UK vehicle manufacturers are committed to full compliance with all current and future trade sanctions.

“While trade flows can vary and, indeed, be quite volatile with growing economies, there is no available evidence to indicate a lack of compliance with existing sanctions, but manufacturers will remain vigilant, and would condemn any party that puts their commitment to compliance at risk.”

Sanctions experts said part of the challenge in combating the flow of goods to Russia via third countries (as appears to be happening in this case) is that it is very difficult, sometimes near impossible, to track those consignments once they enter those other countries.

Tom Keatinge, Director at the Centre for Financial Crime & Security Studies, Royal United Services Institute says: “There are obviously very close economic ties between places like Azerbaijan, Armenia and Russia, they sit within a kind of common economic area. And so really, once the good is in that area, your ability to track it as the manufacturer in the UK is lost.

“What you should of course, be asking yourself, when it comes to exporting that car, or whatever it might be initially is, ‘Do I really think that this exporter who’s suddenly come out of nowhere to buy 100 cars Is actually importing cars only into that third country? Or might they be trying to make money out of circumventing sanctions and selling that onward into Russia?'”

Rolls-Royce, which is owned by BMW, said: “Rolls-Royce Motor Cars ceased production and supply of cars for the Russian market in late February 2022, before international trade sanctions were put in place. In the meantime, governments have implemented far-reaching sanctions, which we fully comply with and support.

“Retail sales of cars to clients are managed by our global dealer network, comprised of independently owned and operated businesses. Our global dealer network is contractually obliged to follow all applicable national and international legal regulations, including those relating to export control.

“If any new Rolls-Royce motor car has been imported into Russia since late February 2022 this has been done so without the knowledge or support of Rolls-Royce Motor Cars.”

A representative from Bentley, owned by VW, said: “We are committed to full compliance with all current and future trade sanctions and there is no evidence to suggest a lack of compliance with existing sanctions, or indeed a change of sales trend in Azerbaijan.”

While the HMRC data does not identify specific carmakers or consignments, it does show that the port most used for this particular trade from the UK was the Port of Bristol, which had never previously exported more than a few million pounds worth of goods each year to Azerbaijan. In the two years following the invasion it saw those exports shoot up to more than £100m a year. The Port of Bristol did not respond to Sky News’s requests for a comment.

For the UK as a whole, the dramatic rise in car exports to Azerbaijan stands out in the trade statistics. In the space of a couple of years, this state of 10 million people, with a GDP around the same size as Ghana, has become the UK car industry’s 16th biggest export destination by value, ahead of Austria, Portugal and Sweden.

Sky News has previously shown that many other banned items, 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. Those states have all recorded sharp increases in their exports to Russia.

Britain’s sanctions minister Anne-Marie Trevelyan said: “The work of investigative journalists and NGOs’ continuing efforts to highlight circumvention are an important part of our collective efforts to track and evidence Putin’s abhorrent crimes.

“We have introduced the largest and most severe package of sanctions ever imposed on Russia or indeed any major economy with 2,000 individuals and entities under the Russia regime. Alongside our international allies we’ve been clear no country should be propping up Russia’s war machine.

“We continue to bear down on those who do business with Putin and his cronies, including sanctioning individuals who try to bypass our sanctions, and working with partners and a range of third countries to stem the flow of goods into Russia.”

World

Court confirms sacking of South Korean president who declared martial law

Published

3 hours ago

April 4, 2025

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Court confirms sacking of South Korean president who declared martial law

South Korea’s constitutional court has confirmed the dismissal of President Yoon Suk Yeol, who was impeached in December after declaring martial law.

His decision to send troops onto the streets led to the country’s worst political crisis in decades.

The court ruled to uphold the impeachment saying the conservative leader “violated his duty as commander-in-chief by mobilising troops” when he declared martial law.

The president was also said to have taken actions “beyond the powers provided in the constitution”.

Supporters and opponents of the president gathered in their thousands in central Seoul as they awaited the ruling.

The 64-year-old shocked MPs, the public and international allies in early December when he declared martial law, meaning all existing laws regarding civilians were suspended in place of military law.

After suddenly declaring martial law, Mr Yoon sent hundreds of soldiers and police officers to the National Assembly.

He has argued that he sought to maintain order, but some senior military and police officers sent there have told hearings and investigators that Mr Yoon ordered them to drag out politicians to prevent an assembly vote on his decree.

His presidential powers were suspended when the opposition-dominated assembly voted to impeach him on 14 December, accusing him of rebellion.

The unanimous verdict to uphold parliament’s impeachment and remove Mr Yoon from office required the support of at least six of the court’s eight justices.

South Korea must hold a national election within two months to find a new leader.

Lee Jae-myung, leader of the main liberal opposition Democratic Party, is the early favourite to become the country’s next president, according to surveys.

World

Stock markets suffer sharp drops after Donald Trump announces sweeping tariffs

Published

4 hours ago

April 4, 2025

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Stock markets suffer sharp drops after Donald Trump announces sweeping tariffs

Stock markets around the world fell on Thursday after Donald Trump announced sweeping tariffs – with some economists now fearing a recession.

The US president announced tariffs for almost every country – including 10% rates on imports from the UK – on Wednesday evening, sending financial markets reeling.

While the UK’s FTSE 100 closed down 1.55% and the continent’s STOXX Europe 600 index was down 2.67% as of 5.30pm, it was American traders who were hit the most.

Trump tariffs latest: US stock markets tumble

All three of the US’s major markets opened to sharp losses on Thursday morning.

By 8.30pm UK time (3.30pm EST), The Dow Jones Industrial Average was down 3.7%, the S&P 500 opened with a drop of 4.4%, and the Nasdaq composite was down 5.6%.

Compared to their values when Donald Trump was inaugurated, the three markets were down around 5.6%, 8.7% and 14.4%, respectively, according to LSEG.

Worst one-day losses since COVID

As Wall Street trading ended at 9pm in the UK, two indexes had suffered their worst one-day losses since the COVID-19 pandemic.

The S&P 500 fell 4.85%, the Nasdaq dropped 6%, and the Dow Jones fell 4%.

It marks Nasdaq’s biggest daily percentage drop since March 2020 at the start of COVID, and the largest drop for the Dow Jones since June 2020.

‘Trust in President Trump’

White House press secretary Karoline Leavitt told CNN earlier in the day that Mr Trump was “doubling down on his proven economic formula from his first term”.

“To anyone on Wall Street this morning, I would say trust in President Trump,” she told the broadcaster, adding: “This is indeed a national emergency… and it’s about time we have a president who actually does something about it.”

Later, the US president told reporters as he left the White House that “I think it’s going very well,” adding: “The markets are going to boom, the stock is going to boom, the country is going to boom.”

He later said on Air Force One that the UK is “happy” with its tariff – the lowest possible levy of 10% – and added he would be open to negotiations if other countries “offer something phenomenal”.

Economist warns of ‘spiral of doom’

The turbulence in the markets from Mr Trump’s tariffs “just left everybody in shock”, Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions in Boston, told Reuters.

He added that the economy could go into recession as a result, saying that “a lot of the pain, will probably most acutely be felt in the US and that certainly would weigh on broader global growth as well”.

Meanwhile, chief investment officer at St James’s Place Justin Onuekwusi said that international retaliation is likely, even as “it’s clear countries will think about how to retaliate in a politically astute way”.

He warned: “Significant retaliation could lead to a tariff ‘spiral of doom’ that could be the growth shock that drags us into recession.”

It comes as the UK government published a long list of US products that could be subject to reciprocal tariffs – including golf clubs and golf balls.

Running to more than 400 pages, the list is part of a four-week-long consultation with British businesses and suggests whiskey, jeans, livestock, and chemical components.

Meanwhile, Prime Minister Sir Keir Starmer said on Thursday that the US president had launched a “new era” for global trade and that the UK will respond with “cool and calm heads”.

It also comes as Canadian Prime Minister Mark Carney announced a 25% tariff on all American-imported vehicles that are not compliant with the US-Mexico-Canada trade deal.

He added: “The 80-year period when the United States embraced the mantle of global economic leadership, when it forged alliances rooted in trust and mutual respect and championed the free and open exchange of goods and services, is over. This is a tragedy.”

World

Donald Trump announces sweeping global trade tariffs – including 10% on UK imports

Published

1 day ago

April 3, 2025

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Donald Trump announces sweeping global trade tariffs - including 10% on UK imports

Donald Trump has announced a 10% trade tariff on all imports from the UK – as he unleashed sweeping tariffs across the globe.

Speaking at a White House event entitled “Make America Wealthy Again”, the president held up a chart detailing the worst offenders – which also showed the new tariffs the US would be imposing.

“This is Liberation Day,” he told a cheering audience of supporters, while hitting out at foreign “cheaters”.

Follow live: Trump tariffs latest

He claimed “trillions” of dollars from the “reciprocal” levies he was imposing on others’ trade barriers would provide relief for the US taxpayer and restore US jobs and factories.

Mr Trump said the US has been “looted, pillaged, raped, plundered” by other nations.

His first tariff announcement was a 25% duty on all car imports from midnight – 5am on Thursday, UK time.

Mr Trump confirmed the European Union would face a 20% reciprocal tariff on all other imports. China’s rate was set at 34%.

The UK’s rate of 10% was perhaps a shot across the bows over the country’s 20% VAT rate, though the president’s board suggested a 10% tariff imbalance between the two nations.

It was also confirmed that further US tariffs were planned on some individual sectors including semiconductors, pharmaceuticals and critical mineral imports.

The ramping up of duties promises to be painful for the global economy. Tariffs on steel and aluminium are already in effect.

The UK government signalled there would be no immediate retaliation.

Business and Trade Secretary Jonathan Reynolds said: “We will always act in the best interests of UK businesses and consumers. That’s why, throughout the last few weeks, the government has been fully focused on negotiating an economic deal with the United States that strengthens our existing fair and balanced trading relationship.

“The US is our closest ally, so our approach is to remain calm and committed to doing this deal, which we hope will mitigate the impact of what has been announced today.

“We have a range of tools at our disposal and we will not hesitate to act. We will continue to engage with UK businesses including on their assessment of the impact of any further steps we take.

“Nobody wants a trade war and our intention remains to secure a deal. But nothing is off the table and the government will do everything necessary to defend the UK’s national interest.”

The EU has pledged to retaliate, which is a problem for Northern Ireland.

Should that scenario play out, the region faces the prospect of rising prices because all its imports are tied to EU rules under post-Brexit trading arrangements.

It means US goods shipped to Northern Ireland would be subject to the EU’s reprisals.

The impact of a trade war would be expected to be widely negative, with tit-for-tat tariffs risking job losses, a ramping up of prices and cooling of global trade.

Research for the Institute for Public Policy Research has suggested more than 25,000 direct jobs in the UK car manufacturing industry alone could be at risk from the tariffs on car exports to the US.

The Society of Motor Manufacturers and Traders (SMMT) had said the tariff costs could not be absorbed by manufacturers and may lead to a review of output.

The tariffs now on UK exports pose a big risk to growth and the so-called headroom Chancellor Rachel Reeves was forced to restore to the public finances at the spring statement, risking further spending cuts or tax rises ahead to meet her fiscal rules.

A member of the Office for Budget Responsibility (OBR), David Miles, told MPs on Tuesday that US tariffs at 20% or 25% maintained on the UK for five years would “knock out all the headroom the government currently has”.

But he added that a “very limited tariff war” that the UK stays out of could be “mildly positive”.

He said: “There’s a bit of trade that will get diverted to the UK, and some of the exports from China, for example, that would have gone to the US, they’ll be looking for a home for them in the rest of the world.

“And stuff would be available in the UK a bit cheaper than otherwise would have been. So there is one, not central scenario at all, which is very, very mildly potentially positive to the UK. All the other ones which involve the UK facing tariffs are negative, and they’re negative to very different extents.”