‘Quit the country for good’: Mercedes-Benz, Ford finalise Russia withdrawal
Two global car giants have cut ties with Russia as a flood of Western companies put the volatile state at arm’s length.
Two major car manufacturers are the latest to cut ties with Russia amid the Ukraine war.
German car manufacturer Mercedes-Benz had already stopped manufacturing in and exporting to Russia in early March. Still, it is now finalising a deal to sell off its Russian operation to the local car dealer chain – Avtodomnow.
The Wall Street Journal reports the business has taken a $A1.1 billion loss related to its Russian business. That is despite Mercedes CFO Harald Wilhelm claiming the move wouldn’t significantly impact the company’s profits.
Ford is also finalising an exit deal to withdraw from the Russian market.
On Wednesday, Ford said it had sold its 49 per cent stake in a joint venture established in 2011 to produce and distribute its vehicles in Russia.
Want to stream your news? Flash lets you stream 25+ news channels in 1 place. New to Flash? Try 1 month free. Offer available for a limited time only >
“Ford shares will be transferred to the joint venture for a nominal value,” it said, while adding the caveat of the option to repurchase them within five years “should the global situation change”.
The US carmaker maker also reportedly took a $A187.7 million loss after suspending Russian operations earlier.
The company said the final withdrawal, however, will not result in further writedowns.
Mercedes and Ford now join a growing contingent of car makers, including Nissan, Ford, Toyota, Renault, Jaguar Land Rover, General Motors, Aston Martin and Rolls-Royce, to either partially or entirely withdraw from Russia amid its invasion of Ukraine.
Nissan left Russia in early October, reportedly copping a $A1.075 billion hit as it handed over its business to a state-owned entity for less than $A2.
James Baggott, editor-in-chief of the industry website Car Dealer Magazine, described how lucrative Russia may have been for the Mercedes in particular.
“Russia was a lucrative market for luxury car manufacturers like Mercedes prior to the war, with cars like its G-Wagon off-roader and S Class very popular with its elite,” he told the BBC.
“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.”
According to the Association of European Businesses, Mercedes sold 9558 vehicles in Russia between January and September this year. That figure was down almost 73 per cent from the previous year.
A statement from the chief executive of Mercedes-Benz in Russia, Natalia Koroleva, said it prioritised fulfilling obligations to Russian clients preserving Russian jobs.
Many major Western companies, including Starbucks, McDonald’s and Coca-Cola have put Russia at arm’s length since fighting began in Ukraine.
Luxe SUV challenges for ’holy grail’
Powerful and efficient, this high-end machine promises to do it all.
Why Nissan’s break-up is not heartbreaking
A failed merger between two of Japan’s iconic car brands will allow each company to pursue their own identity.
‘Unacceptable’: $95bn car merger scrapped
Months after two of the largest car makers announced they were joining forces, an “unacceptable” disagreement has seen the deal called off.