The German automobile manufacturer Mercedes-Benz said on Wednesday that it will leave the Russian market and sell interests in its industrial and financial services companies to a local investor. With this move, Mercedes-Benz became the latest automaker to leave the nation.
This month, Nissan of Japan recorded a loss of $687 million as a result of the sale of its company in Russia to a state-owned corporation for one euro. This action was similar to one taken by Renault in the past, when the French automaker sold its majority ownership in Russia’s for one rouble.
Mercedes-Benz Russia has announced that they would be selling their shareholding in the local subsidiaries to the automotive retail network Avtodom.
During the presentation of the results for the third quarter, Mercedes Chief Financial Officer Harald Wilhelm stated that the transaction was not expected to give rise to any further significant effects with regard to the group’s profitability and financial position beyond those that were reported in previous quarters.
The final conclusion of the transaction is contingent on the permission of the authorities as well as the execution of the criteria that have been contractually agreed upon,” he said.
Buyback provisions with a six-year time frame were included by both Nissan and Renault. The Russian newspaper Vedomosti reported an anonymous source as claiming that the Mercedes agreement may have a condition that is similar to this one.
A representative for Mercedes said that the company’s 15% share in the Russian truckmaker Kamaz would not be impacted by the deal that was planned and that the stake should be transferred to Daimler Truck this year as scheduled.
Avtodom has said that it would choose a technical partner in order to continue running the manufacturing facilities in the Esipovo industrial estate located to the northwest of Moscow. This is the same area in which Mercedes-Benz operates a production unit.
“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. “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.”
At the beginning of March, Mercedes pulled all of its production out of Russia.
According to the Association of European Businesses (AEB), there were 9,558 Mercedes automobiles sold in Russia during the months of January and September. This is a 72.8% decrease from the same period a year earlier.