In February 2022, when Russia invaded Ukraine, hundreds of Western companies pledged to exit the Russian market in protest. But three years later, as the war continued, the Kyiv School of Economics emerged Reports Of the four thousand international companies operating in Russia before the invasion, only 440 – or only 10% – withdrew completely.
Germany’s big three luxury carmakers – Mercedes, BMW and Audi – were among the companies to announce their departure from Russia, where wealthy Russians’ appetite for luxury German cars had long fueled lucrative operations. Despite EU sanctions that explicitly prohibit the export of luxury cars to Russia, let’s examine what these companies promised – and what they actually delivered.
Mercedes
Mercedes Benz estimated Its assets in Russia are scheduled to reach €2 billion as of the end of 2021. Mercedes’ Moscow factory, which employs 1,000 people, began operations in 2019, producing E-Class sedans and SUVs. At the end of 2021, Mercedes-Benz held a 2.6% share of the Russian car market, selling 43,000 cars.
On March 3, 2022, Mercedes-Benz Announce It “will suspend the export of passenger cars and small trucks to Russia, as well as local manufacturing in Russia until further notice.” It soon became clear that the automaker froze its operations in Russia and decided to completely withdraw from the market. Another notification came in October 2022 when the company announced the sale of its industrial and financial services shares to a local investor, Avtodom Automobile Holding.
The deal, which was completed in April 2023, included the sale of the Mercedes-Benz Manufacturing Rus assembly plant in the Moscow region and all the assets of its local distributor, corporate bank and the brand’s leasing company in Russia.In 2022, sales in Russia fell by 78% to 9,595 units, and 1,528 cars were sold in 2023. Mercedes retained the option to buy back its Russian business at market price, while Avtodom said it planned to produce cars under its own brand.
The German automaker later restricted access to its software to Russian car dealers, including online systems used for maintenance and troubleshooting. Although restricting access to official software somewhat complicated the service and caused inconvenience to Russian Mercedes owners, market players found alternative solutions. For example, they can download service software needed for offline use or change their geographic location to connect to the systems as if they were in another country.
The official Mercedes website in Russia is no longer working.
“As of April 24, 2023, Mercedes-Benz AG has ceased its activities in the Russian market.” Her home page Countries.
Despite Mercedes’ withdrawal and EU sanctions – an EU ban on luxury car exports to Russia, imposed on March 15, 2022 – New cars continue to enter the Russian market through so-called parallel imports. This means that goods can be brought into Russia via third countries without the consent of the manufacturer. According to Russian media, some automakers are aware of and even prefer parallel import plans.
The former official distributor of Mercedes, MB RUS, It continues To sell new Mercedes cars in Russia and have foot Guaranteeing vehicles imported into the country through parallel import. In a letter Mercedes told B4Ukraine that it conducts audits of authorized partners to reduce the risk of sanctions circumvention, while parallel imports fall outside its sphere of influence.
“Mercedes-Benz condemns the Russian attack on Ukraine, and our thoughts remain with the people of Ukraine.” The automaker said in a message.
Audi
In 2021, Audi sold 16,404 cars in Russia, an increase of 7.05% from 15,247 units the previous year. In March 2022, Audi, like parent Volkswagen Group AG, Announce Suspension of car deliveries to Russia. Audi did not have its own production facilities in the country, while Volkswagen decided to stop car production at its two Russian factories “against the backdrop of the Russian attack on Ukraine.”
“The Volkswagen Group received the news regarding the war in Ukraine with great dismay and shock. Volkswagen continues to hope for a cessation of hostilities and a return to diplomacy.” Read the initial announcement.
In 2023, Volkswagen Sold out And its local branches and factory south of Moscow, while Audi has separated its former distributors from its programs. The value of the deal amounted to 125 million euros. According to some EstimatesVolkswagen’s total investments in Russia since 2007 have reached 1.8 billion euros. Audi has it male It no longer supplies Russia with cars directly or indirectly. In 2022, 3,512 Audi cars were sold in Russia; In 2023, this number drops by 90% to 335 vehicles.
The official Russian website of Audi is currently not working. However, unlike Mercedes, the company admits it is still shipping parts.
“Supplies of remaining secondary spare parts to Russia are subject to sanctions compliance review on a case-by-case basis prior to each export.” The company said.
Audi stresses that all its importers must take appropriate steps to prevent the resale of cars to Russia. but, Russians can still buy new Audi cars from the company’s previous cars Official agent.
“There is currently no authorized importer to import our cars into Russia. If our brand cars are offered for sale in Russia, they are outside the sphere of influence of AUDI AG. The company said in a letter To B4Ukraine.
BMW
According to the European Business Association. Nearly 46,800 new BMW cars were sold in Russia in 2021, accounting for a 2.8% share of the Russian car market.This was about 3,800 units more than Mercedes-Benz and almost three times more than Audi’s sales.
At the beginning of the large-scale Russian invasion of Ukraine, BMW Released Clear statement: “We condemn the aggression against Ukraine” However, in practice, the carmaker has chosen the most moderate approach to its business operations in Russia among Germany’s Big Three.
BMW has halted car exports to Russia and halted assembly at its partner facility in Kaliningrad, with official sales falling to just 505 cars in 2023. However, the company has maintained a significant presence through its Russian subsidiary, BMW Russland Trading. While publicly reducing operations and staff reductions, BMW has already expanded its footprint in July 2023 By establishing new spare parts supply lines and expansion Its “warehouse and warehousing” operations. The company continued to provide official spare parts and warranty services, prompting a Russian distributor to do so Note In September 2023, BMW was “feeling better than other manufacturers” in the market.
Although BMW, like Audi and Mercedes, has cut off Russian distributors for its proprietary software, vendors say the move was largely symbolic. Russian media Reports One seller even mentioned that the BMW representative office itself provided them with remote access to connect to dealer databases, allowing them to bypass restrictions.
Russian BMW Website It remains active and is regularly updated with new models, for which recommended prices are not listed. The site also displays approximately 2,024 new cars priced above €50,000. Official dealers listed on the BMW website continue to sell used and new cars through their platforms. It seems that BMW continues to cooperate with dealers who bring cars to Russia however He insists He – she “It did not allow any third-party dealers in Russia to sell new cars.”
******
While Germany’s Big Three luxury automakers have publicly suspended Russian production and exports, their actual withdrawal varies widely. Cars from all three brands continue to flow into Russia through parallel imports, but BMW’s approach stands out as particularly questionable.
While Mercedes has made clear progress, and Audi maintains a limited supply of parts, BMW maintains an active Russian website that advertises new cars and publicly lists dealers selling parallel imported cars. Their claim to not authorize these sales rings hollow when their digital infrastructure facilitates it. The discrepancy between public statements and actions reveals how some companies maintain profitable operations in Russia while trying to maintain their reputation in the West.
Read more:
