On Wednesday, Mercedes-Benz, a German automaker, revealed some information. The company announced that it is quitting the Russian market.
The company also said it would offer a local investor a stake in its financial and industrial services subsections. Due to this decision, Mercedes-Benz is the most recent carmaker to depart the country.
Reasons For the Decision
Nissan (OTC: NSANY), a Japanese company, suffered a $687 million loss this month. This came about as a consequence of the company selling its Russian operations to a state-owned company for one Euro.
This was a similar course of action to what Renault (EPA: RENA) did. Earlier this year, Renault exchanged its controlling interest in Russia’s Avtovaz for one Rouble.
Harald Wilhelm, the Chief Financial Officer of Mercedes, offered some remarks. As the results for the third quarter were revealed, the CFO made the statement.
He said there would be no anticipation for other substantial repercussions from the acquisition. He continued by saying that it relates to the group’s profitability and financial situation. Therefore, he concluded that it was in addition to what was already revealed for the quarter.
He made it clear that the authority’s consent and the execution of the requirements set out in the contract are prerequisites for the transaction’s full completion.
Both Nissan and Renault inserted six-year buyback provisions. According to a source quoted by the Russian newspaper Vedomosti, the Mercedes agreement may have a similar condition.
The proposed acquisition will not affect the company’s 15% holding in Russian vehicle maker Kamaz. A Mercedes official provided this information. The spokesperson also said it would be transferred to Daimler Truck (OTC: DDAIF) as planned this year.
Avtodom Will Buy Mercedes-Benz Russia’s Local Subsidiaries’ Shares
According to Avtodom, it would choose a technical partner. This will allow the manufacturing units in the industrial park of Esipovo to continue operating.
Northwest Moscow is where the estate is situated. In the exact location, Mercedes-Benz has a manufacturing facility.
Natalia Koroleva, the chief executive of Mercedes-Benz Russia, released a statement. She outlined the main goals for agreeing with her message.
She made it plain that the deal’s goal was to improve obligations to Russian clients. This is related to financial services and post-purchase support.
She continued by saying that it was a way to protect the employment of people employed by the company’s Russian-based companies.
At the beginning of March, Mercedes pulled all of its production out of Russia.
In Russia, there were 9,558 purchases of Mercedes vehicles between January and September. The Association of European Businesses provided this information (AEB). This is a reduction of 72.8% from the same time last year.