Parallel Imports Meet Russia's Demand for Premium Tyres Amid Sanctions

Since Western sanctions have restricted access to numerous premium products, parallel imports have emerged as a critical source of high-quality tyres for the Russian market. This workaround has become particularly vital for corporate and fleet users, who have had limited access to their preferred tyre brands since many Western companies exited Russia.

Parallel Imports Meet Russia's Demand for Premium Tyres Amid Sanctions
Parallel Imports Meet Russia's Demand for Premium Tyres Amid Sanctions
October 7, 2024

The Role of Parallel Imports

Two of the top three tyre brands previously favoured by Russian corporations are no longer officially available in the country, creating a gap that parallel imports are now filling. These imports allow for the legal importation of tyres manufactured abroad but without the direct permission of the original brand owner.

Currently, it is estimated that parallel imports make up about 15% of the Russian vehicle market, and this likely extends to the tyre sector. For Russian businesses, these imports are providing a vital supply of premium tyres to meet demand. This approach has prevented what could have been a significant decline in the availability of high-quality tyres for the country.

Market Impact: Supply and Pricing

While parallel imports have sustained the supply of premium tyres, they have also influenced market dynamics. The absence of official distribution channels and the added logistics costs often lead to higher prices for these products. This could be a challenge for consumers, who are likely to face a premium on top of the already higher prices for premium tyres. Nevertheless, for now, parallel imports are enabling Russia’s corporate and fleet customers to access the high-quality tyres they need.

Russian Government’s Response

Recognising the need for parallel imports, the Russian government legalised them in May 2022. This move has spurred the development of a sophisticated industry to support the importation of vehicles and parts, such as tyres, to Russia.

From April 2024, however, the rules governing parallel imports will change. The Eurasian Economic Union (EEU) will implement new regulations, including a joint risk management system and additional utilisation fees, aimed at tackling what officials term ‘grey imports’. These changes may create challenges for companies involved in the parallel import trade, potentially leading to a reduction in the number of businesses that can operate in this sector.

Future Outlook for Premium Tyres in Russia

The new regulations could lead to a crackdown on parallel imports, making it harder for companies to operate and potentially forcing some out of business. At the same time, the growing presence of Chinese tyre brands in Russia may reduce the need for Western premium brands. This trend could reshape the market, particularly as Chinese manufacturers continue to make inroads with competitive products that appeal to Russian consumers.

In the meantime, Russian consumers and businesses are expected to continue sourcing premium Western tyres through parallel imports, navigating the evolving landscape of restrictions and regulations. How long this trend will last remains uncertain, as the market adapts to changing regulations and the influence of new market players.

While parallel imports have sustained the Russian tyre market for now, the long-term sustainability of this strategy is in question as the government tightens control and the market faces increasing competition from alternative suppliers.

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