AutoBeta(AutoBeta.net)03/26 Report--

According to media reports such as the Russian newspaper Izvestia, Mercedes-Benz is about to resume work at its Russian factory and plans to assemble Chinese Red Flag high-end cars. The first models to be put into production may be SUV, of which Red Flag HS5 was certified in Russia at the end of 2022, and Red Flag flagship model H9 was also approved in Russia. The Russian newspaper Izvestia pointed out that Russia is currently negotiating with Red Flag on the issue of car assembly, while at the same time it is also discussing with FAW Group the production of other models.

"the former Mercedes-Benz factory in Moscow will assemble Chinese cars, and our main task is to completely replace Mercedes-Benz, BMW and Audi, which sell 150000-200000 vehicles a year in Russia," Szyszko, general manager of Russia's Autosmart, a subsidiary of the Avtodom Group, said on March 23.

In response to the above news, some media sought confirmation from the Red Flag official. Red Flag officials said: "the former Mercedes-Benz factory on the outskirts of Skoke is about to begin to assemble China's Red Flag high-end cars," and "Russia is not only negotiating with Red Flag on the issue of car assembly." and are discussing with FAW about the production of other models "are false news.

According to the official website of Mercedes-Benz Russia, the Mercedes-Benz plant in the Moscow region began producing cars in 2019 at a cost of 250 million euros and providing more than 1000 jobs, mainly producing Mercedes-Benz E-Class and other SUV models. The plant has an annual capacity of 25000 vehicles.

Hit by the war between Russia and Ukraine and disruptions in the supply of spare parts, Mercedes-Benz suspended car production at its Russian plant in March 2022 and halted car exports to Russia. On October 26, 2022, Mercedes-Benz said it was considering a complete withdrawal from the Russian market and the sale of some of its assets in Russia to Russian car dealer Avtodom, but the completion of the deal would require the approval of all relevant departments.

Mercedes-Benz, which reported 1.8 billion euros in assets and 1 billion euros in liabilities in Russia in the third quarter of 2022, has suffered 709 million euros in losses related to its Russian business so far this year. It did not comment on the potential price of the sale. At the time, Avtodom, a Russian car dealer, said it would get permission from the German government committee by February and finalize a deal to buy all of Mercedes-Benz's Russian assets as soon as possible, including a Mercedes-Benz plant on the outskirts of Moscow.

In February 2023, Mercedes-Benz's industrial and financial services division in Russia was approved for sale to Russian car dealer Avtodom. According to the latest news, the general manager of Avtodom Group said that the Mercedes-Benz plant in Moscow is expected to reopen in the summer of 2023 and is looking for a Chinese car company to produce Chinese high-end cars. However, the specific brand and model were not disclosed, and the company said it was in discussions to study the local production of the car.

Under the influence of the intensification of the conflict between Russia and Ukraine, western sanctions, supply disruptions and the withdrawal of several western car companies from the Russian market, the Russian car market suffered an "epic Waterloo" in 2022. Cumulative annual sales fell 41.24 per cent year-on-year to 687400, down from 1.67 million in 2021.

In addition to the above Mercedes-Benz, up to now, according to the statistics of Automotive Industry concern, some car companies, including French, Japanese and Korean brands, have withdrawn from the Russian auto market. Renault, which accounts for nearly 10% of the Russian auto market, was the first to announce its departure from the Russian market, followed by Toyota, Nissan, Ford and Mazda, while Volkswagen, Hyundai and Mercedes-Benz also plan to sell assets in Russia, which is worth mentioning. While announcing the sale of their Russian operations or factories at a symbolic price, some car companies also specify the "buyback" clause, which the industry believes is the way for these car companies to return to the Russian market in the future.

On the contrary, while Western car companies have withdrawn from the Russian market, Chinese car brands have quickly entered the Russian market to fill the gap, and their share of the Russian market has increased significantly. Data show that Chinese brands sold 123500 vehicles in Russia in 2022, up 13 per cent from a year earlier, and the market share surged from 9 per cent in January to 37 per cent in December 2022. For comparison, Korean brands fell from 28.3% to 11.2%, European brands from 28.3% to 7.3%, Japanese brands from 17.9% to 6.6% and American brands from 1.1% to 0.9%.

In December 2022, Russian executives told local media that car manufacturing plants leaving Russia should be sold to Chinese carmakers. Because many foreign carmakers have left production lines in Russia, selling some of their capacity to Chinese brands will allow them to expand their production capacity locally. As more Chinese auto brands lay out the Russian market, the Russian auto market will usher in a big reshuffle.

On March 17, 2023, Russian Deputy Prime Minister and Minister of Industry and Trade Manturov said that the Ministry of Industry and Trade expects total sales of all categories of cars in Russia to increase by at least 30% in 2023. In addition, prior to this, the Russian Ministry of Industry and Trade and relevant departments expected that the share of Chinese cars in the Russian market would continue to increase this year, and sales in Russia were expected to reach 300000, accounting for 35% of the Russian car market. 37%.

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