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Sollers, the Russian carmaker, said on November 10th that it would buy a 50 per cent stake in the joint venture plant of Japanese carmaker Mazda in Vladivostok, Russia. On the same day, Mazda said in its results announcement that it had decided to transfer all shares of MSMR, a car manufacturing and sales company in Vladivostok, Russia, to our joint venture partner Soles at a nominal price of 1 euro, and signed the transfer agreement on October 24, 2022, but had the right to buy back the shares at the same price within three years.

The move means that Mazda officially withdrew from the Russian market. It is understood that Soles Automobile Group and Mazda Motor Company signed an agreement to set up a joint venture in April 2012. Mazda will build on Soles's existing plant in Vladivostok. The joint venture can produce 50, 000 cars a year in the first phase, and then it will increase to 70, 000. The plant produces Mazda CX-9, CX-5 and Mazda 6 models.

In March, the conflict broke out between Russia and Ukraine, when Mazda stopped exporting parts to the Vladivostok plant and stopped production after the inventory of parts was exhausted. On September 25, Mazda said it had become more and more difficult to operate because of the disruption of the supply chain caused by the war between Russia and Ukraine. Mazda and Soles are in talks to stop car production at the Vladivostok plant and buy Mazda's stake in the joint venture.

According to the latest figures, Russian car sales fell 60.8 per cent year-on-year to 502474 in the first ten months of 2022. In terms of specific brands, cumulative sales of the Lada brand fell 51.5 per cent year-on-year to 142910 vehicles in the first 10 months, while Mazda fell 63.7 per cent to 8494 vehicles year-on-year, with the highest-selling model being the CX-5, which fell 58.1 per cent to 6476 vehicles in the previous month, accounting for 76 per cent of Mazda's total sales in Russia.

In fact, since the escalation of the situation in Russia and Ukraine at the end of February, Russian car sales have been badly hit by sanctions and the mass withdrawal of Western manufacturers and supply chain chaos. Car companies such as Volkswagen, Honda, Ford, BMW, Mercedes-Benz, General Motors, Volvo and Jaguar Land Rover have all announced suspensions of car exports and sales to Russia, while a number of car companies have stopped production at local factories in Russia.

On may 16th, Renault announced its withdrawal from Russia, agreeing to sell its entire stake in Renault Russia to the Moscow municipal government and its 67.69% stake in AvtoVAZ to NAMI, a Russian government-backed automotive research and development center.

On Sept. 23, Toyota withdrew from Russia, and Toyota Motor Co., Ltd. and Toyota Europe have decided to permanently terminate their car manufacturing operations at their plant in St. Petersburg, Russia, a move that means Toyota will stop production in Russia.

On Oct. 12, Nissan announced that it would withdraw from Russia, and all its local operations of its Russian company would be sold to the Russian Institute of Automotive and Automotive engine Science, a move that would cost the company 100 billion yen. Nissan said all shares in its Russian subsidiary would be resold to the Moscow-based Central Research and Development Automotive engine Research Institute (NAMI) for future passenger car projects.

On October 26th, Ford announced its withdrawal from the Russian market by formally selling its 49 per cent stake in its Russian joint venture, Sollers Ford, on its website. It is reported that Ford shares will be transferred to the joint venture at face value, and Ford reserves the option to buy back shares within five years if the global situation changes.

On the same day, Mercedes-Benz disclosed in its third quarterly report that due to the intensification of the conflict between Russia and Ukraine, it plans to sell its industrial and financial services subsidiary to Avtodom, Russia's largest car dealer, but the deal needs to be approved by all relevant departments.

Under the conflict between Russia and Ukraine, French, Japanese and Korean brands that had completed their layout in the Russian auto market had to withdraw. Renault, which once accounted for nearly 10% of the Russian auto market, was the first to leave. Toyota, Nissan, Ford and Mazda followed, while Volkswagen and Mercedes-Benz also planned to sell assets in Russia. Figures show that Russian car sales fell 62.8 per cent year-on-year to 45228 in October 2022. In the future, if the situation in Russia and Ukraine cannot be alleviated, more and more enterprises will announce their withdrawal or become the norm.

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