Luxury Cars Find a Way: Sanctions Evasion in Putin’s Russia
In the wake of Russia’s full-scale invasion of Ukraine in 2022, Western nations imposed strict export bans on luxury goods, including high-end vehicles. These measures targeted the wealthy elite with connections to the Russian state. However, a recent investigation by RFE/RL’s Russian-language investigative unit, Systema, reveals that these sanctions have not fully stopped the flow of luxury cars into Russia. Instead, a network of companies, often with connections to individuals with ties to the military and security services, has emerged to circumvent the restrictions.
A photograph of a lot filled with new cars in Moscow, taken in June 2022.
The Sanctions and the Shift in the Russian Auto Market
The United States, the European Union, and the United Kingdom, among others, prohibited the export of cars valued over $50,000 to Russia – a measure intended to block the import of vehicles like the Rolls Royce Cullinan, which can cost close to $1 million in Russia. Concurrently, major foreign automakers, including luxury brands, shuttered their Russian operations. This exodus reshaped the Russian auto market, with Chinese brands significantly increasing their market share, now accounting for approximately 70% of new car sales.
Navigating the Import Maze
Despite these measures, luxury vehicles remain accessible to Russia’s affluent. Systema’s investigation, based on Russian customs data, found around 1,300 vehicles valued at $100,000 or more imported into Russia from March 2022 onwards. The probe traced supply chains, highlighting companies importing vehicles through jurisdictions like South Korea, Hong Kong, and Kyrgyzstan. These countries, despite having their own import restrictions in some cases, have become key transit points.
The Role of Parallel Imports
To counter the economic pressure, President Vladimir Putin signed a law in June 2022 legalizing parallel imports, which allows for goods to be imported without the right-holder’s permission. This move created avenues for importing various items, including high-end vehicles. However, it’s worth noting that while parallel imports are legal within Russia, exporting sanctioned goods remains illegal. Several instances of individuals in Europe being penalized for exporting luxury cars to Russia have been reported.
Garаnt LLC: A Key Player in the Import Scheme
Systema’s investigation identified 179 Russian importers and 220 exporters from 26 different countries involved in the scheme to import forbidden vehicles between March 2022 and October 2024. A key player in this network is a St. Petersburg-based company called Garant LLC, which specializes in fiberoptic components. Remarkably, this company, with only nine employees and modest pre-war revenue, became the leading importer of luxury vehicles.
Bentley cars on display at a dealership showroom just outside of Moscow in 2016.
Prior to the sanctions, Garant’s annual import spending was only $880,000. Garant’s sole supplier is Jiating Product Factory Limited in Hong Kong. Jiating’s exports to Russia prior to 2022 were mostly fiberoptic components. However, there was a sharp shift in early 2022 to exporting luxury cars to Garant.
Ties to Security Services
The founder and director of Garant, Maria Kalenova, has a background that may provide clues to this situation. Her ex-husband, Aleksandr Stebakov, is linked to individuals with a history of service in Russian security and military forces. One of these individuals, Sergei Lushnikov, is a member of the Federal Protective Service (FSO), which is responsible for the safety of top officials and the protection of state assets. Lushnikov was among the security personnel guarding President Vladimir Putin at events like the St. Petersburg International Cultural Forum. Such connections are thought to offer protection to lucrative businesses, including those involved in import-export. While Garant is officially an intermediary, it is linked to major Russian auto dealer groups, such as Rolf and Major-Auto, who are the end customers for the imported vehicles.
Sergei Lushnikov (right) beside Russian President Vladimir Putin.
The Reactions of Western Automakers
Major Western automakers, including Mercedes-Benz, Jaguar Land Rover, Porsche, Audi, and BMW, have responded to Systema’s inquiries by stating that they are monitoring the situation. These companies typically prohibit sales to unauthorized intermediaries, although subsequent resales are beyond their control. Hong Kong served as a primary transit hub, but countries like South Korea, which have their own sanctions, and Kyrgyzstan have also emerged as key locations for importing sanctioned goods.
Maria Kalenova and Sergei Lushnikov pictured together.
The Bottom Line
While the West has implemented sanctions, a combination of parallel import regulations and a network of companies with connections to the security services allows the super-rich in Russia to continue to access luxury goods. This shows that the law of supply and demand prevails despite the sanctions.
