Business was going well until the Russian troops invaded Ukraine.
(Photo: dpa)
Munich BMW is putting its business in Russia on hold in response to the Ukraine war. “Due to the current geopolitical situation, we will stop our local production and export for the Russian market until further notice,” the carmaker told Handelsblatt in a statement.
The Munich-based Dax group expects that the fighting in Ukraine and the sanctions by the federal government and the EU against Russia, which the company expressly supports, will lead to supply bottlenecks. This will in turn lead to “production interruptions,” explained BMW.
The Bavarians have not yet been able to explain in detail in which of the group’s factories outside of Russia the lines will soon run more slowly or come to a complete standstill. “We are in intensive talks with our suppliers,” explained BMW.
The Munich-based company has been active in Russia since 1999. In Kaliningrad, the Russian vehicle manufacturer Avtotor assembles, welds and paints BMW sedans and SUVs. Heavy off-road vehicles such as the X5, X6 and X7 in particular are assembled on site in Russia from individual parts that BMW supplies to Avtotor from the West. Thanks to local production, BMW avoids high import duties.
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Business was going well until the Russian troops invaded Ukraine. BMW sold around 47,000 cars in Russia last year. That corresponds to an increase of around ten percent compared to 2020. Now, however, a long break could be pending in Russia – not only for BMW.
The automotive industry as a whole is reacting to the Ukraine war with drastic measures. Daimler Truck has stopped producing and selling trucks in Russia and is considering a complete exit from the region. The VW premium subsidiary Audi has stopped deliveries of new cars in Russia until further notice. Volvo also no longer delivers new sedans and SUVs to the largest country in the world. And other companies could soon follow.
Mercedes does not want to write off the Moscow plant
Because Russia is being isolated from the West in such a way that the transport routes to the market are likely to collapse in the foreseeable future, a high-ranking manager predicts behind closed doors. Air traffic is already massively restricted. Now the rail and ship routes to Russia could also be cut off, so the concern in the industry.
Stefan Bratzel, Director of the Center of Automotive Management, has probably priced this in for a long time. “The export of vehicles to Russia is likely to come to a complete standstill,” states the experienced car expert. Meanwhile, local vehicle production in Russia is still ongoing at some companies. For example, Mercedes-Benz is currently still producing models such as the E-Class business sedan in its factory near Moscow, a company spokesman confirmed.
The question is, of course: for how much longer? Internally, the crisis teams go through all possible scenarios. Around 1,000 people work in the Mercedes plant “Moscovia”. In 2019, the brand with the star invested the equivalent of 250 million euros in setting up production in Russia. How things will continue in the coming weeks is hardly predictable. You don’t want to copy the work. But nothing can be ruled out in the current situation.
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