Kyrgyzstan Emerges as Strategic Hub for Luxury Car Exports to Russia

Kyrgyzstan has become a significant hub for luxury car exports to Russia, with dealerships like Berg Auto Premium circumventing sanctions through creative procurement strategies. Despite import bans on luxury vehicles from the EU, the market has witnessed a dramatic increase in vehicle imports, amounting to approximately $730 million within two years. Local dealers leverage connections and logistical routes to facilitate these transactions, ensuring compliance with sanctions while capitalizing on trade opportunities.

Kyrgyzstan has emerged as a significant hub for car exports to Russia, particularly amidst comprehensive economic sanctions imposed following Russia’s invasion of Ukraine. The Moscow-based Berg Auto Premium, a dealership, boasts a remarkable inventory of luxury vehicles, including high-end brands like Rolls-Royce and Tesla, emphasizing their slogan, “We know no borders.” This dealership claims to have over 100 cars worth nearly $17 million available for sale, targeting a market where vehicles face strict import restrictions.

An undercover investigation revealed that despite the European Union’s ban on exporting vehicles over 50,000 euros to Russia, customers can still obtain models like the Porsche 911 Turbo. The dealership’s sales staff offered solutions to facilitate sales through alternative routes, often rerouting vehicles to Russia via Georgia or Kyrgyzstan, with promises that the cars would retain their European origins to avoid scrutiny.

The sanctions from the EU, U.S., and South Korea triggered a drastic increase in vehicle imports to Kyrgyzstan, soaring from just over $8.8 million in 2020-2021 to about $730 million in two years. Analysts assert that Kyrgyzstan does not exhibit increased local demand but has effectively become an intermediary for imports to Russia.

Berg Auto’s operations involve importing vehicles through private individuals to sidestep regulatory challenges. A contact from the dealership acknowledged the collaborative nature of the business community within Bishkek, underscoring informal partnerships among various nationalities engaged in parallel import schemes.

Companies like Mercedes, Rolls-Royce, and Porsche emphasized compliance with sanctions while distancing themselves from unauthorized dealers like Berg Auto. Research indicates that Kyrgyzstan’s competitive customs tariffs and lack of abundant resources enable it to thrive as a re-export center, profiting during the sanctions period.

Records reveal that around one-third of companies involved in car exports to Russia were partially Russian-owned. Many vehicles reported in Kyrgyzstan are actually sent directly to Russia, with the initial paperwork merely processed in Kyrgyzstan, allowing for the evasion of stringent customs checks.

Berg Auto, a recent entrant to the Russian market, was established by Mark Berg, who claimed to take advantage of a parallel import scheme. Despite speculation regarding ties to Kyrgyz officials, the dealership’s connections appear rooted in networks within the local car sales community, wherein several individuals share roles across different dealerships and vehicle importation processes.

In various social media posts, figures in the Kyrgyz vehicle import scene highlight the intricate networks facilitating these transactions. For example, individuals have showcased their transport of luxury vehicles to Kyrgyzstan before distributing them onwards to Russian customers, illustrating a seamless albeit covert car export operation executed under the radar of sanctions.

Kyrgyzstan has successfully positioned itself as a key transit point for luxury car exports to Russia, circumventing international sanctions through careful logistical arrangements. The sharp rise in vehicle imports, driven by local intermediaries and dealers like Berg Auto Premium, illustrates the complex web of trade that continues to thrive despite regulatory barriers. This indicates a significant global market adaptability within Kyrgyzstan’s automotive sector.

Original Source: www.occrp.org