Mercedes-Benz becomes fourth automaker to exit Russia, sells shares to local investor | The Financial Express

Mercedes-Benz becomes fourth automaker to exit Russia, sells shares to local investor

Mercedes-Benz announced its withdrawal from the Russian market and sold the shares of its industrial and financial services subsidiaries to a local investor.

Mercedes-Benz becomes fourth automaker to exit Russia, sells shares to local investor
Mercedes-Benz becomes fourth automaker to exit Russia

Mercedes-Benz on October 26 announced its withdrawal from the Russian market and sold the shares of its industrial and financial services subsidiaries to a local investor. The German automaker is the fourth carmaker to quit its operations after Nissan, Renault and Toyota. 

Earlier this month, following competitor Renault, Japan’s Nissan settled for a $687 million loss while handing over its Russian business to a state-owned entity for one euro. Renault sold the majority stakes to a Russian car dealer chain Avtovaz for one rouble. 

Toyota, last month, pointed out that the supply chain difficulties amidst the Russia-Ukrain war announced its departure from automobile production and sales from the country. 

Along similar lines, Mercedes-Benz will be selling off its shares in the local subsidiaries to Avtovaz 

Presenting the Q3 results, Mercedes Chief Financial Officer Harald Wilhelm stated that the transaction was not expected to give rise to any further significant effects when it comes to the group’s profitability and financial position beyond those reported in previous quarters.

“Final completion of the transaction is subject to the authority’s approval and the implementation of contractually agreed conditions,” he added.

As per a Russian daily, it is believed that Mercedes will be including similar six-year buyback clauses as Nissan and Renault

A Mercedes spokesperson said the company’s 15 percent stake in Russian truckmaker Kamaz would not be affected by the intended transaction and should be transferred to Daimler Truck this year as planned.

Avtodom said it would select a technology partner to continue operating the production facilities at the Esipovo industrial estate northwest of Moscow, where Mercedes-Benz has a production plant.

“The main priorities in agreeing the terms of the transaction were to maximise the fulfilment of obligations to clients from Russia both in terms of after-sales services and financial services, as well as preserving jobs of employees at the Russian divisions of the company,” Natalia Koroleva, CEO of Mercedes-Benz Rus, said in a statement.

Mercedes suspended manufacturing in Russia in early March. The Association of European Businesses (AEB) said 9,558 Mercedes vehicles were sold in Russia from January to September, down 72.8 percent from a year earlier.

At a time when all major automakers are exiting Russia, given the vulnerable component supplies situation, it could become an interesting opportunity for smaller players. 

Avtovaz saw a surge in sales accounting for a 43.3 percent market share for its Lada brand from 17.5 percent a year earlier with a total sale of 18,087 units. 

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First published on: 27-10-2022 at 14:10 IST