Ukraine invasion prompts two more car-makers pull the rug on Russia
By Neil Dowling on 6th November 2022 News, World News
Mercedes-Benz stopped manufacturing in and exporting to the country in early March but now said it is withdrawing from the Russian market and is selling shares in its subsidiaries to a local investor.
Ford last week confirmed that it had finalised a deal to exit the Russian market as well.
The BBC said Ford announced a full suspension of its operations in Russia in March and subsequently sold its 49 per cent stake in the Sollers-Ford joint venture, although it has the option of buying the shares back within five years “should the global situation change”.
Ford’s venture with Sollers started in 2011 with production of the Transit van. The venture later expanded to include Ford’s existing manufacturing facilities of the Mondeo and Focus passenger cars.
At the time, Ford said: “Russia is set to become Europe’s largest market for new vehicles by mid-decade and provides the Ford brand a huge growth opportunity.”
Ford was still bullish in 2015 amidst the fall in the value of the rouble and lagging new vehicle sales by saying the JV would take full advantage of market exits by other brands who were quitting the market and that it was committed to stay in Russia.
Ford’s then European chief – and now global CEO – Jim Farley said the Russian market retained good long term growth prospects in spite of the severe downturn.
In 2019, Ford axed the JV’s Russian car production, to focus on light commercial vehicles.
The two car-makers are the latest to confirm cutting ties with Russia. Nissan left Russia earlier this month, following the same move from Toyota and Renault.
Nissan took a $700 million ($A1.1 billion) loss in handing over its business to a state-owned entity for a nominal fee, reportedly less than $A2.
The BBC quoted Mercedes-Benz’ chief financial officer, Harald Wilhelm, as saying the company’s exit from Russia was not expected to have any serious new effect on profits.
According to the BBC, industry website Car Dealer Magazine said Russia was a lucrative market for luxury car manufacturers like Mercedes prior to the war, particularly with models such as the G Wagen and S Class which were very popular with the nation’s elite.
“Perhaps Mercedes was hoping for a swift resolution to the war, and now that looks unlikely, the firm has finally taken the long-overdue decision to quit the country for good,” the magazine said, noting that Mercedes was slower than its rivals to stop business in Russia.
Other car firms who have withdrawn from the market, including Jaguar Land Rover, General Motors, Aston Martin, BMW and Rolls-Royce, which stopped deliveries to the country in the early months of the war.
The BBC also said that the chief executive of Mercedes-Benz in Russia, Natalia Koroleva, issued a statement saying that the main priorities in the move were to fulfil obligations to Russian clients and preserve jobs in Russia.
The Association of European Businesses (AEB) said 9558 Mercedes vehicles were sold in Russia from January to September, down 72.8 per cent from a year earlier.
By Neil Dowling
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