Mercedes-Benz has assets in Russia of about 2 billion euros ($2.2 billion) that could be at risk if Moscow decides to confiscate the assets of foreign companies that left the country due to its invasion of Ukraine.
The German company said, in its annual report yesterday, Friday: “Although the general impact of the war is difficult to determine, the expropriation of property is one of the risks that may face the company.”
And “Mercedes” is among the A growing list of notable western brands Which suspended its business in Russia temporarily, according to a report by Bloomberg Agency.
The disclosure comes a day after Russia presented proposed measures to take temporary control of departing companies, in which foreign ownership exceeds 25%. If implemented, Russian courts would be able to freeze assets, giving companies the option to restore operations or sell their stake.
Among Mercedes’ assets at risk is a factory outside Moscow that opened in 2019 in the presence of Russian President Vladimir Putin. The facility, which is seen as key to accessing lucrative government contracts, employs more than 1,000 people and produces E-Class sedans and SUVs.
Equipped with robots and other advanced automation, the plant can produce 20,000 vehicles annually.
Russia accounts for 2% of Mercedes sales, according to a Bloomberg Intelligence estimate.
On the other hand, “Mercedes” subsidiaries in Russia have commitments to banks of about one billion euros, and the company said it had issued debt guarantees.
German companies have suffered expropriations by foreign governments in the past, a factor cited by some economic historians as the country’s unwillingness to invest money from its huge current account surplus abroad. After the United States entered World War I, its government took over the American operations of Germany’s Maersk, which led to the creation of Maersk & Co., which is now a completely separate pharmaceutical company.