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Mercedes-Benz completely leaves Russia

2022-10-26 19:29:42Kosova&Bota SHKRUAR NGA REDAKSIA VOX
Mercedes-Benz completely leaves Russia
Mercedes-Benz completely leaves Russia

Mercedes-Benz is selling the stake it still has in Russia to a local investor. The concern has already ended the export of vehicles to Russia and production in the country.

German automaker Mercedes-Benz is selling the stake it still has in Russia to a local investor. The distribution company and passenger car assembly plant, which still employs more than 1,000 people, will be sold to Russian investor Avtodom, the concern, part of Germany's DAX stock exchange, said. Finance chief Harald Wilhelm added that this measure would have no additional financial consequences.

The completion of the transaction is however still to be approved by the administrative authorities. Wilhelm spoke of a "consequential step", as the company had already banned the export of vehicles to Russia and production in the country since early March, after the start of the Russian attack on Ukraine.

In the first half of the year, the shutdown of activities in Russia in response to the war in Ukraine and related EU sanctions resulted in expenses of €700 million. In the absence of other effects, Mercedes expects neither depreciation nor sales revenue.

Russian activity is sold for one euro

French auto concern Renault recently sold its business in Russia for one ruble. Its Japanese partner Nissan sold its Russian activities to a Russian public company for one euro and had to write off the equivalent of 685 million euros. Nissan and Renault have negotiated a buyback clause within six years. Mercedes-Benz has also provided a buyback option.

But other companies are currently finding it more difficult to fully disengage from the Russian market. Just yesterday, SAP chief financial officer Luka Mucic said the software group had not fully exited its Russia business by the end of the year as planned. The company attributes responsibility for this to the legal requirements imposed on customers and employees.

With one condition

Mercedes-Benz in Russia, however, has already confirmed that the company will leave the Russian market. The main purpose of the transaction with Avtodom was to fulfill the obligations to customers and employees of Mercedes-Benz. No information was provided on the financial aspect of the deal.

Russia's Industry and Trade Ministry said Avtodom could "attract" other companies to "organize" joint production at the Jesipovo plant near Moscow. The plant was inaugurated no later than 2019, in the presence of Russian President Vladimir Putin and former German Economy Minister Peter Altmaier. At the time, Putin declared that he would do everything to ensure that the group did not regret its commitment to Russia. The production center was built for about 250 million euros.

Net profit doubled

Mercedes-Benz also released its quarterly figures today. From July to September, Mercedes-Benz doubled its net profit to almost four billion euros. Thus, the concern has exceeded the expectations of the financial market. Revenues for the three months increased by 19 percent, to nearly 40 billion euros.

According to the company, this "solid" economic result is explained by the strong demand as well as the application of higher prices.

"In combination with cost discipline, we are making the business more resilient and thus setting the pace for the coming months," Wilhelm said. If raw material cost inflation, for example, were to become even higher, additional efficiency measures would be needed, he added without elaborating. Other positions should still be eliminated in administration rather than production.


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