The Russian invasion of Ukraine is getting close to its ninth month, and Mercedes-Benz became the latest European carmaker to leave Russia for good. We’ve heard and read about the use of some of the most powerful weapon systems, including the likes of “Ghost of Kyiv”, dubbed as the most important fighter aircraft, as well as the Russian flagship “Moscow” which was sunk by Ukrainian missiles.
However, the Russian invasion of Ukraine has affected lives beyond the people in these two countries. The automobile industry has experienced several setbacks from this invasion as well. Many carmakers have taken a drastic decision that is affecting the world. The oldest automaker in the world has announced its decision to leave the Russian market after selling its share to a local investor.
How is the invasion affecting other automakers? What does this mean for Mercedes as a brand? Which other top automakers have left the Russian market? Let’s find out.
Here’s why Mercedes decided to exit the Russian automotive market.
What Does The Exit Of Mercedes-Benz From The Russian Market Mean?
Everything comes at a cost. And while the decision of the German luxury and commercial vehicle automotive brand to exit the Russian market is considered the right one by many, it does come at a certain cost in terms of finances.
A representative for the German automaker announced that the company planned to withdraw from the Russian market and transfer its shares in its joint ventures to a local investor. With this, Mercedes-Benz has already stopped sending cars and vans to Russia and stopped making cars in Russia.
The German premium automaker will sell its assets to Avtodom, a Russian car dealership chain. Even though no one knows when the buyback option will be available, it is said to be part of the agreement.
After the invasion of the nearby Ukrainian land in March, it stopped production altogether. Due to its Russian business, Mercedes-Benz has suffered a loss of €709 million, or about $703 million. According to reports, only 9,558 Mercedes-Benz vehicles were sold in Russia from January to September, a 72.8 percent decrease from 2021.
Many Top Automakers Have Left The Russian Market Already
Some logistics and shipping giants, such as MSC and Maersk, stopped shipping containers to and from Russia. This caused problems in the supply chain that forced automakers to stop making cars in Russia.
Volkswagen said it is ceasing operations in Russia. The automaker has temporarily halted operations at its Nizhny Novgorod and Kaluga facilities. Audi, a division of Volkswagen, announced it was modifying production at its Hungarian plant, which contributes significantly to Hungary’s exports because the conflict in Ukraine was affecting supply chains and sales.
Suzuki, a Japanese automaker, has stopped shipping cars from its Hungarian facility to Russia and Ukraine. Daimler-Benz has reportedly reduced production at its Hungarian plant to only two shifts. Toyota Motor Corporation said it would suspend operations at its facilities in Russia. The RAV4 and Camry models are produced in the company’s St. Petersburg plant, primarily for the Russian market.
Daimler Truck said it would stop all activity in Russia, including its joint venture with Kamaz. Mercedes-Benz Vehicles Vostok and Fuso Kamaz Trucks Vostok joined forces in 2017 to make the JV. Since 2009, the JV has made 35,000 trucks for the Russian market.
Mercedes-Benz, the parent company of Daimler before it split off, said it would sell its 15% stake in Kamaz. The company recently said that Russia plans to take over foreign companies that leave because Russia’s invasion of Ukraine could put its assets worth $2.2 billion at risk.
Even Ford Has Announced Its Russian Exit
Ford Motor Company and AB Volvo have discontinued operations in Russia. Ford’s only Ukrainian presence is a joint venture with Russian automaker Sollers, which Ford sold to Sollers in 2019. Renault stopped doing some work at its car assembly plants in Russia because logistics problems caused parts shortages.
Renault owns three Russian automobile assembly factories but has not disclosed output reduction. Renault’s Moscow plant produces Kaptur, Duster, Nouveau Duster, Arkana, and Nissan Terrano. Nissan and Mitsubishi are Renault’s strategic partners. Renault controls Russian carmaker AvtoVAZ.
Hyundai Group’s St. Petersburg plant produces 27.2% of Russia’s automobiles, 230,000 annually. Due to supply chain issues, the business suspended automobile assembly in St. Petersburg from March 1-5. Skoda Auto, which Volkswagen owns, said it would cut back on production in its home country because of supply problems, but it would keep doing business in Russia.
Skoda’s second-largest market last year was Russia. Skoda claimed that VW would determine if it would leave Russia or Ukraine. Mitsubishi Motors may halt Russian manufacturing. A Kaluga assembly facility produces Peugeot, Citroën, and Mitsubishi vehicles in a joint venture with PSA Peugeot Citroën.
Only time will tell what happens next as the invasion of Russia on Ukraine continues.
Sources: Forbes, Mercedes-Benz, Ford
Read More: Mercedes Joins A Long List Of Automakers To Exit The Russian Market