Mercedes-Benz leaves Russia – Business – Kommersant

Mercedes has become the third major car manufacturer to leave Russia. The concern sold its plant in the Moscow region and property to a dealer of the Avtodom Group of Companies. The concern estimated its assets in the Russian Federation at €2 billion, but analysts refer to the practice of selling factories for a ruble in the current conditions. The production of Chinese cars will probably begin at the site.

Mercedes-Benz has closed a deal to sell a plant owned by Mercedes-Benz Manufacturing Rus, buildings with service areas and an office, and distributor rights to the Avtodom dealer, Kommersant’s interlocutors in the car market told Kommersant. Kommersant wrote about the planned deal on August 26 – then it was at the final stage, but Mercedes had some “document problems”.

The concern will make a statement on October 26 in the morning, three interlocutors of Kommersant say.

As a result, the German premium concern will leave the Russian market. Recall that the supply of cars more than €50 thousand from the EU and all cars from the US to the Russian Federation is prohibited by sanctions. Also, other restrictions actually make it impossible for stable supplies of components to the Russian Federation. Kommersant sent a request to the company.

Assets in the Russian Federation at the end of 2021 were estimated by Mercedes at €2 billion. Automotive expert Vladimir Bespalov finds it difficult to evaluate the deal given the current situation in the car market, when assets are sold for 1 ruble. Kommersant’s source notes that even if the deal is cash, the company will have problems with the withdrawal of funds from the Russian Federation.

Mercedes is the third manufacturer in the passenger car industry to leave the Russian market. Prior to that, Renault and Nissan had sold their assets and left it. The Toyota plant has also closed in the country. In its reporting for the first half of the year, Mercedes reported on the risks of expropriating Russian assets. It said that activities in the Russian Federation were revised in accordance with the sanctions restrictions. The cost of this was estimated at €709 million, of which €658 million was in the passenger car segment.

The Mercedes-Benz plant with a capacity of 25,000 cars per year was launched in Esipovo near Moscow quite recently – in 2019. Investments in the project amounted to 19 billion rubles, welding and painting were carried out. “Mercedes will not be disappointed in how work and business in Russia is being built and going,” Russian President Vladimir Putin assured during the opening of the site. At the same time, he indicated that he knew how long the dialogue with the company had been going on. Kommersant’s sources note that Mercedes-Benz has indeed been discussing localization for years. At the same time, the company was one of the first to sign a special investment contract (gives benefits in exchange for investments), and the project actually became one of the trump cards to justify the need for localization at the level of welding and painting of premium cars in the Russian Federation, one of Kommersant’s interlocutors notes.

Last year, the Mercedes-Benz concern increased sales in Russia by 11%, to 43,000 cars. According to the results of nine months of this year, they decreased by 73%, to 9.1 thousand units. This is slightly more than in the crisis year of 2009, when Mercedes sold 8.4 thousand cars in three quarters. As Kommersant wrote on June 8, Mercedes did not sell the existing warehouses due to fears against the backdrop of sanctions. The brand’s cars in factory covers in a parking lot near Moscow were filmed by Autonews several times during the summer.

Avtodom Group of Companies specializes in the sale and maintenance of premium and luxury cars. The holding belongs to Andrey Olkhovsky, he also holds the post of general director. Even before the current crisis, Avtodom was talking about plans to produce cars. “The organization of our own industrial assembly is one of our nearest projects. We are not yet ready to announce the brand and even the segment of cars in which we will try to realize ourselves within the framework of industrial assembly, but I think we will talk about this in more detail in the next few months. If it weren’t for the restrictions related to the coronavirus that have imposed their difficulties in communications and signing documents with our foreign partners, perhaps this would have happened already in 2021,” Mr. Olkhovsky said in an interview with Avtostat in December last year. In August, Avtodom announced active negotiations with a number of Chinese automakers on the subject of exclusive distribution of new brands in Russia.

Olga Nikitina