Mercedes-Benz Could Lose $2.2 Billion in Assets if Russia Moves Forward With Its Nationalization Plan

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The economic toll of Russia’s invasion of Ukraine continues to rise, and at least one luxury marque says it’s poised to lose billions as Moscow scrambles to recover.

Mercedes-Benz announced late last week that it could incur losses of up to $2.2 billion if Russia moves forward with a threat to nationalize foreign assets, reports Reuters. The German luxury automaker also warned that the war could have a negative impact on sales, cause parts and production disruptions and even increase the risk of cyber attacks.

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Russia has been heavily sanctioned since since President Vladimir Putin launched the invasion late last month leaving his country’s economy in tatters. His counter to the sanctions? Start nationalizing the assets of companies that are more than 25 percent owned by foreigners from “unfriendly states.”

A Mercedes-Benz dealership in Russia - Credit: AP Images
A Mercedes-Benz dealership in Russia - Credit: AP Images

AP Images

Last week, Russia’s ruling party, United Russia, approved a bill that would allow it to do just that, as reported by Reuters. If it passes into law, companies that have stopped doing business in the country or pledged to leave it entirely would be put into temporary administration for three months. (They could avoid administration by resuming business within five days.) At that point the firm’s assets would be used to form a new company, while the old one would be liquidated via auction. United Russia says the bill will “prevent bankruptcy and save jobs.”

Mercedes-Benz would stand to be directly impacted by that process. In 2019, the brand opened up a factory just northwest of Moscow that builds E-Class sedans and SUVs. It was the first plant opened by a foreign automaker in the country for years and employs over 1,000 local workers. Mercedes-Benz says the facility and its other Russian subsidiaries were valued at $2.2 billion at the end of 2021.

The disclosure was made in the “Risks related to the legal and political framework” section of the company’s just-released annual report and comes just one week after the automaker announced it would halt exports to Russia. Mercedes-Benz is one of many luxury brands and automakers that have stopped doing business in the country since since the beginning of the war.

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