China is busting sanctions with a scheme to smuggle cars into Russia, allowing vehicles from Toyota, Mazda and German premium brands to reach markets in Moscow and beyond via grey schemes, Reuters reports.

Most of the vehicles are produced in China at joint factories operated by international brands or are shipped there after assembly in other countries. In China, the cars are registered as “zero kilometres” and marked as sold before being resold to Russia as “used vehicles”, Reuters reported on February 10. The arrangement allows intermediaries to avoid seeking export approval from manufacturers under the terms of their joint venture deals. Technically, the international brands are supposed to have halted exports to Russia, but many western companies have ignored the grey schemes to maintain sales as sales in their home markets slump.

Other waystations, such as Kyrgyzstan and Belarus have seen the import of high-end European brands soar as western manufacturers turn a blind eye to transit schemes. As bne IntelliNews reported, The German and French makers of luxury cars lobbied Brussels in June last summer to exclude expanded sanctions in July on exports to Belarus, which eventually ended up in Russia.

The Chinese scheme has created a price differential between the two markets. In China, the vehicles are sold at lower prices, while in Russia they are marketed at levels close to those of new cars, despite being technically classified as second-hand imports.

Data from Autostat indicates that in 2025 nearly half of the 130,000 Western and Japanese cars sold in Russia were produced in China. Since the beginning of the war, more than 700,000 such vehicles have been imported into Russia, according to the agency.

Automakers including BMW AG, Mercedes-Benz Group AG and Volkswagen AG have said they stopped shipments to Russia after sanctions were imposed. The companies have also acknowledged that investigating potential breaches through parallel imports and third-party intermediaries is “difficult,” given the complexity of cross-border trade flows.