Never Can Say Goodbye. Despite Corporate Boycotts, Western Luxury Brands Are Still for Sale in Russia

In April 2022, the Russian Ministry of Industry and Trade compiled a list of goods the Kremlin deemed too in-demand to keep out of Russia. It included furniture, cosmetics, clothing and footwear, cars and spare parts, industrial equipment, medicines, electronics, household appliances, musical instruments, even weapons. And even though officials warned at the time about the possible risks associated with this workaround solution to the boycotts – among them are the likelihood of an increase in the share of counterfeits and forgeries, problems with warranty and service, as well as logistics problems – quite a number of the name brands that were meant to disappear from the Russian marketplace are still in plentiful supply. Last year, data shows, $20 billion of goods were imported into Russia through parallel imports.

Cars

Luxury car manufacturers Mercedes, BMW, Audi, and Land Rover were among the first in the global automotive industry to announce their withdrawal from Russia shortly after the full-scale invasion of Ukraine. At first, these companies talked about suspending the export of cars to Russia and suspending production in the country; later, one after another, they began to pack up and sell their factories in Russia. This year, German automakers even announced restrictions on access to software for Russian car dealers.

Nevertheless, foreign cars can still be found in Russian dealerships, albeit at hugely inflated prices owing in large point to the collapse of the ruble.

Models from different years, including 2022-2023, are for sale across the country, in particular, via the Avtodom dealership network. For example, for about $155,844, a Russian buyer can acquire a new 2023 BMW X5 crossover from this dealer (the same car costs about $85,000 in neighboring Finland). According to a manager The Insider spoke to as a prospective buyer, the car is “the most current model, which has just been updated,” in stock and available for viewing or test driving on the same day. Though the manager couldn’t guarantee it would remain in the Avtodom inventory for long, owing to high demand.

Today, the manager told The Insider, BMW “feels better than other manufacturers” in terms of spare parts and service. This year, the German car company expanded its “warehouse and storage” activities in Russia, establishing new supply lines of its spare parts and providing warranty service to Russian customers, in spite of the fact that BMW has had no official deliveries into Russia since March 2022.

The mileage on the X5 The Insider inquired about is about 111 miles, which these days qualifies as brand new because smugglers need to show the car is somewhat used to get it across the border.

Last year, 12% of new passenger cars sold in Russia were brought into the country through parallel imports, according to the industry analytic service Avtostat.

Alcohol

Last year, the Bermuda-based alcohol manufacturer Bacardi announced that, in solidarity with Ukraine, it was suspending the export of its products to Russia and freezing all advertising in the country. However, this announcement of a boycott has quietly disappeared from the pro-Ukraine statement still visible on the Bacardi website. And plenty of the company’s alcohol brands – including not only its signature rum but also whiskey, gin, and tequila products - can still be found in Russian stores.