Germany’s Daimler Still Planning New Assembly Plant in Russia

Posted: December 14, 2014 in Econ 101, Free Trade, Sanctions on Russia Meaningless

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Daimler Reportedly Still Planning New Assembly Plant in Russia
Dec 14, 2014

Things may not be so bad in Russia for the automotive sector after all, as Daimler AG continues to want to build an assembly plant there. The automaker has reportedly applied to the city of St. Petersburg to set up a factory in the region.News was broke by Russian news agency Interfax, which cited local officials. Daimler’s plan bucks the recent trend of foreign automakers scaling down or even quitting the Russian market due to the economic crisis triggered by western sanctions.According to the aforementioned source, St. Petersburg vice-governor Mikhail Mokretsov has assigned a municipal investment committee to handle Daimler’s bid. Local authorities are said to have already proposed a possible site in the Russian city’s southern belt.Interfax also cited Russian Industry and Trade Minister Denis Manturov, who said Daimler is negotiating with officials in Moscow as well about setting up a passenger car plant.

However, Daimler has not offered details about the reported plans. “There are no decisions at this point about the start of local production of Mercedes-Benz passenger cars in Russia,” a Daimler spokeswoman was quoted as saying by Reuters. She added that Daimler continues to monitor all markets, including Russia, with a view to setting up potential local capacities.

Daimler currently builds trucks in Russia with local partner Kamaz and vans with GAZ.



Daimler Reportedly Considering New Plant in Russia for Mercedes-Benz Cars
By Dan Mihalascu

Sanctions on Russia from the European Union and the United States don’t seem to have an effect on German carmakers’ plans to increase their activities in Russia. Daimler AG is reportedly considering building Mercedes-Benz cars in Russia as part of a plan to widen its global production capacity and assemble more vehicles near their destination markets.“We have been looking at the basic parameters and potential of local production of passenger cars in Russia, and have held various discussions. These activities will be continued,” Daimler spokesman Sebastian Wahle told Bloomberg. Wahle added that Daimler is seeking to expand production to meet 2020 growth targets, but didn’t say when a decision will be taken. On Tuesday, Russian newspaper Vedomosti reported Mercedes’s interest for a production facility in the country.Daimler boss Dieter Zetsche has made no secret of his desire to regain the top spot in global luxury sales after losing it to BMW in 2005 and ceding second place to Audi in 2011. Last week Mercedes-Benz announced plans to spend €1 billion ($1.38 billion) to more than double production at a Beijing plant.The Russian car market has been on decline for the past year, with deliveries shrinking 4 percent in January and February 2014, following a 5.5 percent drop in 2013 to 2.78 million vehicles.

However, the market remains attractive because the country has far fewer cars per capita compared to Germany, Europe’s largest car market. Russia has a population of 143.5 million, while Germany, where 2.95 million cars were sold last year, has 81.9 million.



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