Car industry insists 2,000% increase in sales to Azerbaijan has nothing to do with Russia
Britain’s car industry has insisted that an unprecedented 2,000% increase in vehicle exports to Azerbaijan has nothing to with Russia and is explained by the fact that the former Soviet state is a “flourishing market in its own right”.
Sky analysis has found that the British car sector sent another £40m worth of cars to Azerbaijan in the first month of this year, raising fresh questions about whether those cars were being sent there to circumvent sanctions on Russia.
New data from HM Revenue & Customs shows that while direct car exports to Russia remain at zero, where they have been since the imposition of sanctions in 2022, in January £43m worth of cars were sent to Azerbaijan, the former Soviet state neighbouring Russia.
That meant Azerbaijan, which hitherto had rarely made the top 75 export destinations for British cars, is now the 12th biggest foreign market, by value, for British-made cars: above Switzerland, Canada and Spain.
UK carmakers have pledged not to send cars to Russia, with sanctions formally banning the export of “dual use” items which could be repurposed as weapons in the Ukraine war. There are separate sanctions specifically banning the trade of cars worth over £42,000.
However, Sky News analysis found last week that over precisely the same period as British car exports to Azerbaijan rose sharply, there was a near-simultaneous rise in car exports from Azerbaijan to Russia.
Please use Chrome browser for a more accessible video player
British-made luxury cars still being bought by rich Russians
The average value of cars sent from the UK to Azerbaijan in January was just over £115,000.
Trade data shows that similar increases in British exports have been seen in other former Soviet Russian neighbours, including Kazakhstan, Armenia and Georgia.
A spokesman from Britain’s motoring lobby group, the Society of Motor Manufacturers and Traders (SMMT), said it had detected no evidence the vehicles being sent to Azerbaijan were destined for Russia – and that they were evidence that it was a “flourishing market in its own right”.
“UK vehicle exports to Azerbaijan – as to many countries globally – have increased due to a number of factors, not least a flourishing economy, new model launches and pent-up demand,” it said.
Azerbaijan’s flatlining economy
However, the notion that the exports were evidence of a flourishing economy stands in stark contrast to the economic data, which show that Azerbaijan’s GDP per capita has been flat for a decade and a half at around $15,000 in purchasing power parity terms.
Since two years preceding the pandemic, the value of car exports to Azerbaijan has risen by more than 2,000%. No other sizeable car market in the world has come close, save for Kazakhstan, the other Russian neighbour, whose imports of British-made cars are up 800%.
Please use Chrome browser for a more accessible video player
Carmakers told to act after Sky report
The SMMT said: “Wherever the UK automotive industry exports, it is committed to compliance with all trade and economic sanctions, and continues to work closely with government and the new Office For Sanctions to ensure the effective implementation of the regulations.
“There is no evidence available of that commitment being compromised, and it is right to monitor for any potential vulnerabilities in a fast-moving and evolving environment.
“The automotive industry remains in dialogue with government and other international partners enforcing co-ordinated trade restrictions, to ensure adherence to both the letter and the spirit of the sanctions, across all vulnerable sectors.”
While the sheer number of cars going to Azerbaijan is small, the value of those cars is consistently high, averaging well over £100,000 and suggesting they are mostly luxury cars.
There have been similar flows detected from other European nations, including Germany and Poland, to other former Soviet states neighbouring Russia.
Following the original Sky News story last week, Foreign Office Minister Anne-Marie Trevelyan said car companies should examine their orders to ensure they are complying with sanctions rules.
Business
US trade court blocks Donald Trump from imposing sweeping global tariffs – claiming he ‘exceeded his authority’
You probably recall the stories about Leicester’s clothing industry in recent years: grim labour conditions, pay below the minimum wage, “dark factories” serving the fast fashion sector. What is less well known is what happened next. In short, the industry has cratered.
In the wake of the recurrent scandals over “sweatshop” conditions in Leicester, the majority of major brands have now abandoned the city, triggering an implosion in production in the place that once boasted that it “clothed the world”.
And now Leicester faces a further existential double-threat: competition from Chinese companies like Shein and Temu, and the impending arrival of cheap imports from India, following the recent trade deal signed with the UK. Many worry it could spell an end for the city’s fashion business altogether.
Gauging the scale of the recent collapse is challenging because many of the textile and apparel factories in Leicester are small operations that can start up and shut down rapidly, but according to data provided to Sky News by SP&KO, a consultancy founded by fashion sector veterans Kathy O’Driscoll and Simon Platts, the number has fallen from 1,500 in 2017 to just 96 this year. This 94% collapse comes amid growing concerns that British clothes-making more broadly is facing an existential crisis.
A trade fair tries to reignite enthusiasm for the local clothing industry
More on this story:
The modern slaves making our clothes in Leicester
How Leicester’s textile workers are being exploited
Boohoo failed in Leicester supply chain malpractice
In an in-depth investigation carried out over recent months, Sky News has visited sites in the city shut down in the face of a collapse of demand. Thousands of fashion workers are understood to have lost their jobs. Many factories lie empty, their machines gathering dust.
The vast majority of high street and fast fashion brands that once sourced their clothes in Leicester have now shifted their supply chains to North Africa and South Asia.
And a new report from UKFT – Britain’s fashion and textiles lobby group – has found that a staggering 95% of clothes companies have either trimmed or completely eliminated clothes manufacturing in the UK. Some 58% of brands, by turnover, now have an explicit policy not to source clothes from the UK.
Seamstresses in one of the city’s former factories
Clothing industry workers in Leicester
Jenny Holloway, chair of the Apparel & Textile Manufacturers Association, said: “We know of factories that were asked to become a potential supplier [to high street brands], got so far down the line, invested on sampling, invested time and money, policies, and then it’s like: ‘oh, sorry, we can’t use you, because Leicester is embargoed.'”
Tejas Shah, a third-generation manufacturer whose family company Shahtex used to make materials for Marks & Spencer, said: “I’ve spoken to brands in the past who, if I moved my factory 15 miles north into Loughborough, would be happy to work with me. But because I have an LE1, LE4 postcode, they don’t want to work for me.”
Shahtex in Leicester used to make materials for Marks & Spencer
Tejas Shah, of Leicester-based firm Shahtex
Threat of Chinese brands Shein and Temu
That pain has been exacerbated by a new phenomenon: the rise of Chinese fast fashion brands Shein and Temu.
They offer consumers ultra-cheap clothes and goods, made in Chinese factories and flown direct to UK households. And, thanks to a customs loophole known as “de minimis”, those goods don’t even incur tariffs when they arrive in the country.
An online advert for Chinese fast fashion company Shein
According to Satvir Singh, who runs Our Fashion, one of the last remaining knitwear producers in the city, this threat could prove the final straw for Leicester’s garments sector.
“It is having an impact on our production – and I think the whole retail sector, at least for clothing, are feeling that pinch.”
Inside one of the city’s remaining clothesmakers
While Donald Trump has threatened to abolish the loophole in the US, the UK has only announced a review with no timeline.
“If we look at what Trump’s done, he’s just thinking more about his local economy because he can see the long-term effects,” said Mr Singh. “I think [abolishing de minimis exceptions] will make a huge difference. I think ultimately it’s about a level playing field.”
A spokesperson for Temu told Sky News: “We welcome UK manufacturers and businesses to explore a low-cost way to grow with us. By the end of 2025, we expect half our UK sales to come from local sellers and local warehouses.”
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business3 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway