Image Source: Babel
Following the invasion of Ukraine in February, Mercedes has become the most recent Western corporation to leave Russia.
Beginning in the first week of March, the German company ceased producing in and importing from the nation.
But as of right now, it declares that it would leave the Russian market and sell shares of its subsidiaries to a regional investor.
Ford revealed Wednesday that an agreement to leave the Russian market had also been completed.
In March, the company declared a complete halt to all of its activities in Russia. It now has a 49% ownership in the Sollers-Ford joint venture. But retains the option to repurchase it after five years “should the global scenario alter.”
Following Toyota and Renault, a Japanese company named Nissan left Russia earlier this month.
Nissan lost $700 million (£600 million) when it transferred its operations to a state-owned company for a small cost, allegedly less than £1.
Mercedes’ chief financial officer, Harald Wilhelm, stated that the business didn’t expect its exit from Russia to impact its earnings significantly.
The choice was made after several Western corporations, including Starbucks, McDonald’s, and Coca-Cola, left Russia earlier this year.
Western automakers scale back operation
In the early stages of the war, deliveries to the nation were stopped by other automakers like Jaguar Land Rover, General Motors, Aston Martin, and Rolls-Royce.
When Mercedes stopped exports and suspended operations in Russia early this year, according to James Baggott, editor-in-chief of the industry website Car Dealer Magazine. It was following other businesses’ lead. Nevertheless, a large number of other automakers abruptly left the nation.
In a statement, Natalia Koroleva, chief executive of Mercedes-Benz in Russia, stated that keeping jobs in Russia and upholding promises to Russian clients were the two critical goals of the decision.
According to the AEB Mercedes sold 9,558 vehicles in Russia from January to September, a 72.8% decrease from last year.
Mercedes raises its profit projection
To counteract supply chain bottlenecks that have limited industry productivity this year. Mercedes-Benz increased its full-year profit prediction on Wednesday. This is due to the demand for luxury vehicles and cost savings.
After profits at its vehicles division nearly tripled in the third quarter from pre-pandemic levels. The German automaker said it now expects group earnings to rise by at least 15% this year.
According to chief financial officer Harald Wilhelm, the company is ready for next year thanks to pent-up demand in Europe and a large order backlog. The company will also give special attention to reducing inventory in the year’s final three months. As a result, the company anticipated slightly higher fourth-quarter sales than the prior year.
Mercedes-Benz, then a member of the Daimler Group, promised in 2020 to reduce fixed expenses, capital expenditures, and research and development spending by more than 20% by 2025. This notable improvement in profitability follows that commitment.
According to chief financial officer Harald Wilhelm, the company may need to make more cuts than anticipated to meet that goal due to cost inflation.
Wilhelm responded that individual case-by-case conversations were taking place. When asked how the automaker would support suppliers struggling with increased expenses.
According to him, the firm will continue to prioritize the premium status of its vehicles over volume sales. It has no intention of lowering list pricing or increasing discounting in the face of mounting financial pressure on consumers.
In the third quarter, the automobile division made 4.03 billion euros from 28.2 billion in revenue. Compared to 1.4 billion euros and 23.5 billion in the same quarter of 2019.
The business increased its 12-14% full-year margin prediction for the automobile division to 13-15%.
