The Fall of the Russian Ruble and Car Exports

 

The Russian ruble has declined significantly during the past few years, as controversies surrounding international actions and embargoes being placed on it by the United States and the EU have severely hindered its economy. But where there’s weakness, there’s also opportunity, as now the countries that are a part of the Commonwealth of Independent States (CIS), which consists of Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, and Uzbekistan, have been able to engage in profitable import/export endeavors involving car exports.

The opportunities that are available are numerous now, as the people living in these countries, such as in Tajikistan or Belarus, can now use the weakened Russian ruble and the exchange rate to purchase vehicles at better prices.

Based on some of the exchange rates, a vehicle that was once valued at $65,000 in Russia could now cost only $29,000 based on the favorable exchange rate. It would cost even more from the United States, somewhere around $55,000, taking into account transportation costs and various customs duties and tariffs.

How Do They Get the Cars from Russia?

Since many of the countries in the Commonwealth of Independent States are landlocked countries, shipping them can present some challenges. However, most of the importers are choosing to either:

  • Visit Russia and drive back the vehicle to their home country

Or

  • Ship the cars through a railroad.

There are many railways present that go into these countries, and they can be convenient to use to decrease the shipping time as much as possible.

Making matters easier is that some of these countries are also members of the Eurasian Customs Union, which results in them being able to bypass much of the paperwork and regulations that often accompany the import and export process. This can be thought of as being similar to how it is with the member nations of the European Union.

Many of these countries are even trying to formulate a unified set of standards for all vehicle purchases throughout the region to make the process even easier.


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The Negative Effects

Since so many are choosing to forego purchasing vehicles from their own country and instead, are purchasing them from Russia, this means that car dealerships in these countries are seeing a dearth in sales. As a result, they have been trying to compete by decreasing the prices that they sell their vehicles at, cutting the prices by a few thousand to even $10,000 dollars. This practice of price slashing is not expected to last though, as it will only exist as long as people import cars from Russia at these prices due to the exchange rate. Eventually, there will be less cars available for import from Russia, which, based on the laws of supply and demand, will result in an increase in price.

Those living in countries in the CIS can profit immensely if they play their cards right in regards to importing these cars. Interesting times indeed!

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