Mercedes-Benz has announced that it will exit Russia and sell all shares in its local subsidiary to a little-known Russian investor.
The German automaker is the latest foreign carmaker to abandon the Russian market after halting operations there in early March following the invasion of Ukraine.
revealed by forbes The local investor was Avtodom, a Russian car dealership chain.
Neither side provided financial details of the Oct. 26 transaction or future plans for the brand.
The Russian Ministry of Industry and Trade later referred to the deal in a Telegram statement.
“Mercedes-Benz intends to sell its stake in its Russian subsidiary to local investor Avtodom,” the ministry said.
In a separate statement, the German automaker confirmed that it would hand over local shares to Russian car dealers. report AFP.
“Completion of the transaction is subject to the approval of all relevant authorities,” Mercedes-Benz said in a statement.
Mercedes’ 15% stake in Russian truck maker Kamaz was unaffected by the latest move, and a deal to transfer its stake to Daimler Trucks is on schedule, a company spokesman said. rice field.
“The main priority in agreeing to the terms of the transaction was to maximize the fulfillment of our obligations to our Russian clients, both in terms of after-sales service and financial services, and to employ employees in the Russian division of the company. to maintain, ”said Natalia Koroleva, CEO of Mercedes-Benz Rus, in a press statement.
goodbye moscow
In a presentation to investors, Harald Wilhelm, CFO of Mercedes-Benz, said that apart from the losses already incurred in Russia in the second and third quarters, what does the exit mean for the company’s future financials? He said it wouldn’t affect him.
“The final completion of the transaction is subject to the approval of the authorities and the implementation of the terms agreed in the contract,” Wilhelm said.
The European Business Association reports that only 9,558 Mercedes-Benz vehicles were sold in Russia from January to September, down 72.8% from 2021.
“Avtodom, the new owner of the Russian division of Mercedes-Benz, will be able to attract other companies as partners in joint production,” the Russian government said.
Avtodom said it would find a local partner to resume operations at the Esipovo industrial park northwest of Moscow, where the Mercedes-Benz production plant was located.
The sanctions against Russia by many leaders of the international community have severely disrupted supply chains around the world and have had a major impact on the technology and automotive manufacturing sectors.
Most of the Western car companies left Russia due to political and logistical pressure when the war in Ukraine began in late February.
“Mercedes-Benz suspended exports of passenger cars and vans to Russia and local production there at the beginning of the year,” said a spokeswoman for the German automaker. CBS news.
Foreign automakers escape disputes and sanctions
Mercedes-Benz’ approval came on the same day that Ford Motor Company completed its withdrawal from Russia.
ford is press releasesold the remaining Russian ventures, and[followed] In March of this year, we will completely stop all operations in Russia, including manufacturing, parts supply, IT and engineering support. ”
An American automaker has sold its 49% stake in Sollers Ford Joint Venture. It will be transferred to our Russian partner at a nominal value.
The deal would allow Ford to retain the option to buy them back within five years “if global conditions change.”
Japanese car company Toyota announced I left Russia in September.
Fellow Japanese rival Nissan also left Russia earlier this month with a loss of $687 million. according to company statement.
Another AvtoVAZ shareholder, Renault, sold its majority stake for a similar amount for just 1 ruble.
Mazda is considering exiting as well, and Volkswagen is actively looking for a local buyer to acquire the Kaluga plant, even though the production plant has been closed since the start of the war.
South Korea’s Kia Motors has yet to decide whether to continue operations at its St. Petersburg plant operated by Hyundai Motor’s Russian subsidiary.
Both Nissan and Renault, like Ford, have six-year buyback clauses.
It is unclear if Mercedes-Benz has a similar clause in its contract, but rumors have been circulating in the Russian media that it does.
Reuters contributed to this report.
follow
Bryan S. Jung is a New York City resident with a background in politics and the legal industry. He graduated from Binghamton University.