German luxury car makers Mercedes, BMW, and Audi, in nearly identical statements, announced the suspension of local production in Russia as well as exports to the Russian market shortly after Moscow’s full-scale invasion of Ukraine. However, the subsequent actions of the automobile giants differed. Which of them fully exited Russia, and which continued to do business in the market of the aggressor state?
Mercedes
On March 3, 2022, Mercedes-Benz declared that it “will suspend the export of passenger cars and vans to Russia as well as the local manufacturing in Russia until further notice.” It soon became clear that the automaker froze its operations in Russia and decided to fully withdraw from the market. Further notice came in October 2022, when the company announced it was selling its shares in both industrial and financial services subsidiaries to a local investor, Avtodom Automobile Holding. The deal, finalized in April 2023, included the sale of the Mercedes-Benz Manufacturing Rus assembly plant in the Moscow region, along with all assets of its local distributor, a corporate bank, and the brand’s leasing subsidiary in Russia. Mercedes retained the option to buy back its Russian business at market price, while Avtodom said it plans to produce cars under its own brand.
The German automaker later restricted access to its software for Russian car dealers, including online systems used for maintenance and troubleshooting. Although restricting access to official software somewhat complicated service and caused inconveniences for Russian Mercedes owners, market players found workarounds. For example, they are able to download the necessary service programs for offline use or change their geolocation to connect to the systems as if they are in another country.
The official Mercedes website in Russia is no longer operational. Its main page states: “As of April 24, 2023, Mercedes-Benz AG ceases its activities in the Russian market.”
Despite Mercedes’s withdrawal and EU sanctions — the European Union’s export ban on luxury cars to Russia, imposed on March 15, 2022 — new cars continue to enter the Russian market through the so-called parallel imports. This means that goods can be brought into Russia via third countries without a manufacturer’s consent. According to Russian media, some carmakers are aware of parallel import schemes and even favor them. Mercedes’s former official distributor, “MB RUS,” continues to sell new Mercedes cars in Russia and has introduced a warranty for vehicles brought into the country via parallel imports. In a letter to B4Ukraine Mercedes stated that they conduct audits of authorized partners to minimize the risk of sanctions circumvention, while the parallel imports are beyond their sphere of influence.
“Mercedes-Benz condemns Russia’s attack on Ukraine and our thoughts continue to be with the people of Ukraine,” the automaker said in a letter.
AUDI
Audi, similar to its parent Volkswagen AG group, announced the suspension of delivering cars to Russia in March 2022. Audi did not have its own production facilities in the country, whereas Volkswagen decided to halt vehicle production at its two Russian plants “against the background of the Russian attack on Ukraine.” The initial announcement read, “The Volkswagen Group has received the news about the war in Ukraine with great dismay and shock. Volkswagen continues to hope for a cessation of hostilities and a return to diplomacy.”
In 2023, Volkswagen sold off its local subsidiaries and a plant south of Moscow, while Audi disconnected its former dealers from its software. Audi has stated that it no longer supplies cars directly or indirectly to Russia. Its official Russian website is currently not operational. However, unlike Mercedes, Audi acknowledges that it still ships spare parts. “The remaining minor spare parts supplies to Russia are subject to case-by-case sanction compliance reviews, prior to each export,” the company said. Although Audi emphasizes that all its importers must take proper steps to stop cars from being resold to Russia, Russians are still able to buy new Audi cars from the company’s former official dealer.
“There is currently no licensed importer for the import of our vehicles in Russia. If vehicles of our brand have been offered for sale in Russia, they are outside the sphere of influence of AUDI AG,” the company said in a letter to B4Ukraine.
BMW
At the beginning of Russia’s large-scale invasion of Ukraine, BMW released a clear statement: “We condemn the aggression against Ukraine.” However, in practice, the automaker opted for perhaps the mildest approach regarding its business operations in Russia among the “Big Three”. The company stopped exports of vehicles to Russia and ceased assembly of vehicles with a partner in Kaliningrad. However, it continued to officially supply spare parts for its cars. According to Russian media, the office of BMW’s representative in Russia, “BMW Russland Trading”, has scaled back its operations but while most main activities have ceased, and staff reportedly have been reduced to a minimum, the company continues to maintain some level of activity. This ongoing presence may serve administrative or logistical purposes since in July 2023 BMW established new supply lines for spare parts, expanded its “warehouse and storage” operations in the country, and continued to provide warranty services to Russian customers. In September 2023, a local seller’s manager said that BMW “feels better than other manufacturers” in terms of spare parts and service.
Although BMW, like Audi and Mercedes, did disconnect Russian dealers from its proprietary software, sellers say this action was largely symbolic. Russian media reports that one seller even mentioned that BMW’s representative office itself provided them with remote access to connect to dealer databases, allowing them to bypass the restriction.
BMW’s Russian website remains active and is regularly updated with new models, recommended prices of which, however, are not listed. The website also features nearly new 2024 vehicles priced over €50,000. Official dealers listed on the BMW website continue to sell not only used vehicles but also new ones through their platforms. It appears that BMW continues to collaborate with dealers who bring cars into Russia, but insists it “has not authorized any third-party dealerships in Russia to sell new vehicles.”
Despite automakers halting local Russian production and official vehicle exports, some of them continue involvement in the Russian market through spare parts supply, and minimal on-ground presence which reflects a more nuanced approach, with only partial disengagement. Although prices may have risen, the former official distributors of the ‘Big Three’ continue to sell new cars in Russia. There are different shades of gray, and BMW’s case — with its official website continuing to facilitate car sales in Russia — stands out as the most egregious of the three. The company’s claims that it has not authorized any third-party dealerships in Russia to sell new vehicles seem hypocritical as its website lists dealers that openly sell new cars brought into the country through parallel imports and advertises barely new vehicles.