In additional signs that show the Russian economy is rapidly recovering from the sanctions imposed upon it by the West, Daimler is localizing its production of Mercedes-Benz SUVs and sedans due to strong sales and the growth potential of the Russian market.
As we noted last week, Russian domestic auto sales are up 15 percent on the year with “pent up luxury demand”, according to the industry analysts Autostat. The Russian automotive sector has also been boosted by government support measures: comprising 7.5 billion rubles in budget subsidies, these are expected to provide additional momentum. The Russian market is expected to develop and provide sustainable long term growth.
Daimler meanwhile have begun construction of their new factory in the northern suburbs of Moscow. The firm is investing over €250 million (US$279 million) in the factory, creating over 1,000 jobs. The new factory is located in the Esipovo Industrial Park, around 40 km northwest of the Russian capital. It will manufacture sport utility vehicles (SUV) and E-class sedans, the first of which, will leave the assembly line in 2019.
Daimler has chosen Moscow as a center for its global expansion because of Russia’s strategic importance, potential for market growth, and the popularity of Mercedes-Benz in the Russian premium car market. Last year, Mercedes-Benz was the strongest-selling premium automobile brand in Russia, for the fourth year running. The best-selling models were the E-Class sedans and the SUVs.
Russians have also taken to blinging up their autos, with the Imperial Russian coach-builder Dartz working with Mercedes Benz to produce limited edition vehicles such as that shown. Dartz, who are now based in Latvia, are responsible for producing the world’s most expensive SUV, the Mercedes-Benz based Prombron Red Diamond, which features white gold – ruby embedded badges as well as a gold-plated, bullet-proof windows, an exhaust system made out of tungsten, diamond – ruby encrusted gauges, a Kevlar exterior coating, and leather made out of whale penises. It retails for €1 million.
Eleven foreign auto manufacturers have production operations or are constructing their plants in Russia as the domestic market and access to EAEU markets is expected to improve. “The Russian market is solidifying and growing”, says Chris Devonshire-Ellis of Dezan Shira & Associates. “Asian based auto component manufacturers may now wish to take a look at this market given the effectual withdrawal of European and American brands”.
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