Surge in sale of UK-made cars to Russia's neighbours shows how it's beating sanctions

British carmakers appear to have continued selling hundreds of millions of pounds of luxury vehicles to Russia even after the invasion of Ukraine and the imposition of sanctions, exporting the cars indirectly via former Soviet states, Sky News analysis suggests.

While direct British car exports to Russia have fallen to zero following the invasion of Ukraine in 2022, that collapse has been followed by a corresponding increase in car exports to countries neighbouring Russia, most notably Azerbaijan.

Our analysis, based on official HMRC trade data, finds that the UK exported £273m of vehicles to Azerbaijan last year, a 1,860% increase compared with the five-year period preceding the invasion.

Not only is the increase in exports to Azerbaijan unprecedented, it is of a similar magnitude to the annual car exports to Russia in the two years before the imposition of sanctions, which averaged £330m.

Alongside the UK HMRC statistics, Sky News has analysed UN international trade data which shows that over precisely the same period that Britain recorded an unprecedented increase in car exports to Azerbaijan, Azerbaijan recorded an unprecedented increase in car exports to Russia.

The data chimes with testimony from Sky sources, who told us that while Russian car buyers sourcing German vehicles have primarily sent them via Kyrgyzstan, they prefer to use Azerbaijan as a route for British cars.

British carmakers insist that they are no longer selling cars to Russia. And the government data, collected by the HMRC on all goods leaving the country, do not constitute proof that the cars ended up in Russia. It is impossible to track each British consignment once it has left port, especially once it has arrived at a third country.

However, the government is concerned about this grey area, whereby goods may be sent to Russia via former Soviet satellite states in the Caucasus and central Asia.

Cars are among the items banned from Russia under the so-called “dual use” sanctions regime. There is a specific ban of the sale of luxury cars – those worth more than £42,000 – to Russia.

The HMRC database, which also shows the count of cars sold as well as the total value, reveals that the average value of UK cars exported to Azerbaijan was more than £100,000 – suggesting that the consignments are primarily or exclusively luxury cars.

Britain’s motoring lobby group the SMMT said: “UK vehicle manufacturers are committed to full compliance with all current and future trade sanctions.

“While trade flows can vary and, indeed, be quite volatile with growing economies, there is no available evidence to indicate a lack of compliance with existing sanctions, but manufacturers will remain vigilant, and would condemn any party that puts their commitment to compliance at risk.”

Sanctions experts said part of the challenge in combating the flow of goods to Russia via third countries (as appears to be happening in this case) is that it is very difficult, sometimes near impossible, to track those consignments once they enter those other countries.

Tom Keatinge, Director at the Centre for Financial Crime & Security Studies, Royal United Services Institute says: “There are obviously very close economic ties between places like Azerbaijan, Armenia and Russia, they sit within a kind of common economic area. And so really, once the good is in that area, your ability to track it as the manufacturer in the UK is lost.

“What you should of course, be asking yourself, when it comes to exporting that car, or whatever it might be initially is, ‘Do I really think that this exporter who’s suddenly come out of nowhere to buy 100 cars Is actually importing cars only into that third country? Or might they be trying to make money out of circumventing sanctions and selling that onward into Russia?'”

Rolls-Royce, which is owned by BMW, said: “Rolls-Royce Motor Cars ceased production and supply of cars for the Russian market in late February 2022, before international trade sanctions were put in place. In the meantime, governments have implemented far-reaching sanctions, which we fully comply with and support.

“Retail sales of cars to clients are managed by our global dealer network, comprised of independently owned and operated businesses. Our global dealer network is contractually obliged to follow all applicable national and international legal regulations, including those relating to export control.

“If any new Rolls-Royce motor car has been imported into Russia since late February 2022 this has been done so without the knowledge or support of Rolls-Royce Motor Cars.”

A representative from Bentley, owned by VW, said: “We are committed to full compliance with all current and future trade sanctions and there is no evidence to suggest a lack of compliance with existing sanctions, or indeed a change of sales trend in Azerbaijan.”

While the HMRC data does not identify specific carmakers or consignments, it does show that the port most used for this particular trade from the UK was the Port of Bristol, which had never previously exported more than a few million pounds worth of goods each year to Azerbaijan. In the two years following the invasion it saw those exports shoot up to more than £100m a year. The Port of Bristol did not respond to Sky News’s requests for a comment.

For the UK as a whole, the dramatic rise in car exports to Azerbaijan stands out in the trade statistics. In the space of a couple of years, this state of 10 million people, with a GDP around the same size as Ghana, has become the UK car industry’s 16th biggest export destination by value, ahead of Austria, Portugal and Sweden.

Sky News has previously shown that many other banned items, including those known to have been repurposed as weapons, have been sent to former Soviet states in the Caucasus and Central Asia, including Kyrgyzstan and Armenia. Those states have all recorded sharp increases in their exports to Russia.

Britain’s sanctions minister Anne-Marie Trevelyan said: “The work of investigative journalists and NGOs’ continuing efforts to highlight circumvention are an important part of our collective efforts to track and evidence Putin’s abhorrent crimes.

“We have introduced the largest and most severe package of sanctions ever imposed on Russia or indeed any major economy with 2,000 individuals and entities under the Russia regime. Alongside our international allies we’ve been clear no country should be propping up Russia’s war machine.

“We continue to bear down on those who do business with Putin and his cronies, including sanctioning individuals who try to bypass our sanctions, and working with partners and a range of third countries to stem the flow of goods into Russia.”