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You Can Still Buy a New Rolls-Royce in Russia, Nearly a Year After Sanctions Hit

london, united kindom may 5 the rolls royce wraith black badge seen at hr owen rolls royce in mayfair, london hr owen rolls royce recently opened a brand new showroom in mayfair to display their newest models photo by martyn lucygetty images
You Can Still Buy a New Rolls-Royce In RussiaMartyn Lucy/Getty Images

Moscovites can still buy new Rolls-Royces from showroom floors, nearly a year after the company officially stopped doing business in Russia, according to a new report from Daily Mail.

Following the country's invasion of Ukraine, Russia has faced some of the strictest sanctions in history, cut off from the international banking system, Western economies, and vital imports for both its military and civilian sectors. As part of that, the European Union has banned the export of high-end cars to Russia. Many Western companies have also voluntarily chosen to leave. Rolls-Royce pulled out of the country in March 2022, yet the Mail found five new Rolls-Royces on the showroom floor of a Moscow dealership.

The Mail reports that the cars were shipped to Russia via a third country in the fall of 2022. Rolls-Royce has not been able to confirm when these cars were produced, who they were originally sold to, or how they got there. But Rolls-Royce has little incentive to send cars to Russia itself; Sanction dodging by large companies is typically punished severely, and the company has seen record demand worldwide over the last few years. Five more units to Moscow wouldn't be worth the existential risk.

In a statement, the company says it's investigating how these cars got into the country:

"Any new cars currently on sale in Russia were either built and delivered before March 2022, when Rolls-Royce stopped building cars for the Russian market, or they have been imported into Russia illegally by third parties. Should any dealer be found to be selling illegally imported cars, an immediate cease and desist notice would be issued by Rolls-Royce Motor Cars Limited as per our normal dealer agreement terms.

We condemn the aggression against Ukraine and follow developments with great concern and dismay. As a BMW Group company with global operations, we stand for the peaceful coexistence of different cultures all over the world – at all times and in all locations. Our thoughts are with all those who are experiencing suffering and loss in this war. The BMW Group is supporting affected people with an initial immediate contribution to an international relief organisation of the United Nations. In addition, our employees are assisting in a variety of ways."

Dodging sanctions using so-called "third countries" is nothing new for Putin's wartime economy. While the United States, European Union, and their allies can largely block direct shipments of prohibited goods from Russia, they struggle to stop non-sanctioned Russian allies from buying on the country's behalf. Countries like Armenia, Belarus, Kazakhstan, or Kyrgyzstan can purchase Western goods on the open market. Russian firms are then allowed to import them directly without the approval of trademark owners, a practice known as "parallel importing."

Western companies and countries do usually attempt to curtail this, which makes it hard to import large goods in large quantities. The extra cost of brokers and shipping makes it costly, too. As a result, mass-produced Western cars have been almost entirely replaced in the Russian market by Chinese imports. But for cars sold in small quantities at high prices—like, say, a Rolls-Royce—it becomes easier to skirt sanctions. Rolls-Royce can try to prevent brokers in Armenia from re-exporting cars, but brokers often disguise their intentions. It's not hard for a handful of cars to slip through.

It's a key lesson in how sanctions against large, motivated regimes work. They can make sourcing things more difficult, or more expensive, but never impossible.

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