The Iron Curtain may be lowering on Russia again, at least when it comes to the country's auto industry. The government there is reportedly considering a ban on imported cars as a response if the West puts more sanctions in place. However, even if the restrictions materialize, domestically built vehicles from foreign automakers would likely still receive an exemption.
Russia and Western governments are fighting back and forth in a war of words over the country's alleged support of separatists in Ukraine. Sanctions from both sides are aimed at harming the other's economy enough to give in. After recently limiting some food imports, Russian Prime Minister Dmitry Medvedev hinted that further restrictions could be leveled at other industries, including automobiles.
According to Reuters, Vladimir Putin reportedly already considered limiting vehicle imports but eventually rejected the idea. The plan was left as a more drastic option, though. Unnamed Russian government sources recently told the Vedomosti newspaper that the strategy was still under consideration. However, the state hasn't actually begun preparing for any such implementation.
If the import sanctions do actually materialize, they would be a complete reversal of recent trends in the Russian auto industry. Analysts were already predicting decline of up to 30 percent in the country's new car market for 2014, and tariffs were also expected to fall, which would further boost imports. There were even rumors of some automakers cutting back on factory capacity; Ford responded to the weakened market by cutting about 950 jobs there in April.