Mercedes-Benz plans to pull out of Russia entirely, selling its operations in the country to Russian car dealer Avtodom. CFO Harald Wilhelm said in a conference call with journalists on Wednesday. In addition to the sales company, Avtodom is also to take over the plant near Moscow, which Mercedes opened with great pomp only three years ago. “Mercedes-Benz believes in Russia,” said the then CEO Dieter Zetsche. Important addressee: Russia’s dictator Vladimir Putin, who, together with Zetsche and the then Federal Minister of Economics Peter Altmaier (CDU), pressed the symbolic button for the start of production. In the future, Chinese cars should be manufactured in the assembly plant – this also has symbolism, according to the Russian media.
Mercedes suspended business in Russia shortly after Putin’s attack on all of Ukraine. Wilhelm spoke of the fact that these had previously been in “hibernation”. This situation is “unsustainable in the long run”. The team responsible is said to have worked on the sale for months, and talks with Russian players are currently difficult, and not just for Mercedes. The sale has no impact on earnings, Wilhelm said. In the first half of the year, Mercedes booked costs of 700 million euros due to the suspended business. A spokesman said the price was “not disclosed”. Mercedes has secured a buyback option that will take effect after the sanctions end. The sale is “subject to official approvals,” said Wilhelm.
Mercedes continue with big profits
Mercedes has not yet completely withdrawn from Russia with this move. The group still holds a 15 percent stake in the Russian tank and truck manufacturer Kamaz. This stake was actually supposed to be transferred to the recently spun off Daimler Truck group. That was put on hold with the Russian invasion of Ukraine. For its part, Daimler Truck has stopped operational cooperation with Kamaz.
Mercedes CFO Wilhelm commented on the presentation of the quarterly figures. The group continues to generate high profits and earned 5.2 billion euros before interest and taxes from July to September alone. Four-fifths more than in the same period last year, when profit was $2.8 billion. Sales increased by a fifth to 37.7 billion euros. A year ago, the lack of chips had slowed deliveries, but pushed prices up. Wilhelm now said that they “want to protect” these higher prices and margins in the future. Should the economic environment deteriorate, the intention would be to reduce the volume rather than push the cars onto the market with discounts.
situation in China? “I’m a number fuzzy, not a diplomat”
However, he was also confident about the coming months and spoke of “robust demand”. In addition, the well-filled order book from the times of the acute shortage of chips is helping, he has not seen any noticeably high cancellations so far. He also sees no reason why the situation “should go over the cliff” in the coming year. For the full year 2022, the group raised its outlook slightly. The operating profit should now be significantly and not just slightly above the 16 billion euros from the previous year, which means an increase of more than 15 percent.
Wilhelm described the situation in China, the most important sales market, cautiously after the party congress of the Communist Party. The response to Covid would have unsettled consumers. The lockdown measures are “unpredictable”. This is to be expected for the coming year as well. But he does not want to make any political statements. “I’m a number fuzzy, not a diplomat.”
