You can still buy a new Rolls-Royce in Russia, almost a year after the sanctions hit

You can still buy a new Rolls-Royce in RussiaMartyn Lucy/Getty Images

Muscovites can still buy new Rolls-Royces in showrooms, nearly a year after the company officially ceased operations in Russia, according to a new report from Daily Mail.

Following the country’s invasion of Ukraine, Russia faced some of the toughest sanctions in history, cut off from the international banking system, Western economies and vital imports for its military and civilian sectors. In this context, the European Union has banned the export of high-end cars to Russia. Many Western companies have also voluntarily chosen to leave. Rolls-Royce withdrew from the country in March 2022, but them To post found five new Rolls-Royces in the showroom of a Moscow dealership.

The To post reports that the cars were shipped to Russia via a third country in the fall of 2022. Rolls-Royce was unable to confirm when these cars were produced, to whom they were originally sold, or how they got there. But Rolls-Royce has little incentive to send cars to Russia itself; Dodging sanctions by big companies is usually punished harshly, and the company has seen record demand worldwide in recent years. Five more units in Moscow would not be worth the existential risk.

“We are absolutely opposed to anything that violates the sanctions,” said Gerry Spahn, Rolls-Royce communications manager for the Americas. Road & Track. “We support the people of Ukraine in what they do. We have not sold or shipped any vehicles or parts, or done any business in Russian markets since the sanctions came into force.”

The company says it is investigating how these cars entered the country. In a statement, the company went further:

All new cars currently on sale in Russia were either built and delivered before March 2022, when Rolls-Royce stopped building cars for the Russian market, or were illegally imported into Russia by third parties. If a dealership is found to be selling illegally imported cars, an immediate cease and desist notice will be issued by Rolls-Royce Motor Cars Limited under the normal terms of our dealership agreement.

We condemn the aggression against Ukraine and follow developments with great concern and dismay. As a globally operating BMW Group company, we stand for the peaceful coexistence of different cultures around the world, anytime, anywhere. Our hearts go out to all who suffer suffering and loss in this war. The BMW Group is supporting those affected with a first immediate contribution to an international humanitarian organization of the United Nations. In addition, our employees help us in various ways.”

Dodging sanctions by using so-called “third countries” is nothing new to Putin’s war economy. While the United States, the European Union and their allies can largely block direct shipments of prohibited goods from Russia, they struggle to prevent unsanctioned Russian allies from buying on behalf of the country. Countries like Armenia, Belarus, Kazakhstan or Kyrgyzstan can buy Western products on the open market. Russian companies are then allowed to import them directly without the approval of trademark owners, a practice known as “parallel importing”.

Western companies and countries usually try to limit this, making it difficult to import large goods in large quantities. The added cost of brokers and shipping also makes it expensive. As a result, mass-produced Western cars were almost completely replaced in the Russian market by Chinese imports. But for cars sold in small quantities at high prices – like, say, a Rolls-Royce – it becomes easier to circumvent sanctions. Rolls-Royce may try to prevent brokers in Armenia from re-exporting cars, but brokers often disguise their intentions. It’s not hard for a handful of cars to sneak past.

This is a key lesson in how sanctions work against large, motivated regimes. They can make procurement more difficult or more expensive, but never impossible.

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