Russia: 2 billion euros in danger for Mercedes-Benz

Like the majority of the Western political-economic community, Mercedes Benz in turn participates in the imposition of economic sanctions against Russia. Since March 3, the brand has ceased all production on Russian soil in addition to suspending all exports to the country. This decision threatens today to lose more than 2 billion euros (about 2.8 billion Canadian dollars) to the automotive giant, according to Mercedes-Benz itself.

Mercedes-Benz’s decision to suspend operations in Russia further fuels the wave of similar measures being rolled out by businesses and governments of all kinds. The economic sanctions imposed on the country that instigated the Russo-Ukrainian conflict are unprecedented, but Russia does not intend to turn the other cheek.

In response to all these sanctions, Moscow very seriously threatens to cause huge sums of money to be lost to companies that cease their operations in the territory.

Nationalization

Indeed, on March 9, as reported by Reutersthe current federal party (United Russia) claimed that a parliamentary committee had approved the first stage of a bill to nationalize the assets of any company that leaves the country if 25% of it is owned by a foreign entity said to be “unfriendly” towards Russia.

Thus, the German group Mercedes-Benz AG, which is certainly more than 25% owned by a legal entity from a “non-friendly” country, sees all of its assets on Russian territory at risk of being seized by the government. It is therefore a little over 2 billion euros that could disappear from the group’s balance sheet; or a factory with more than 1,000 employees that produces more than 25,000 vehicles per year.

The factory and the assets

As mentioned, the factory belonging to the Mercedes-Benz group has an annual production capacity of more than 25,000 units. Located in the city of Esipovo, 40 kilometers northwest of Moscow, it was also created in 2019, when President Vladimir Putin himself was present on the spot during the inauguration ceremony. In addition to this factory, inventories as well as concessions are also the subject of this nationalization project, and the value of all these assets reaches just over 2 billion euros.

Moreover, the Mercedes-Benz group is the guarantor of a loan worth more than one billion euros which was granted to the Russian division of the group by a group of financial institutions in the country.