Daimler to begin Mercedes-Benz production in Moscow region

© Michaela Rehle
The Russian Trade Ministry has agreed German automaker Daimler AG can begin the assembly of Mercedes-Benz vehicles in the Moscow region, according to Deputy Director of Transportation Vsevolod Babushkin.

“The plan has been approved by the ministry and is currently awaiting the green light from the regional authorities,” said Babushkin to the Rambler News Service, stressing that the Moscow region is interested in the project.

He says negotiations are still underway, and there is no start date set.

Daimler plans to localize production of Mercedes-Benz vehicles in the Esipovo Industrial Park in the Moscow region. The new plant will assemble E-Class, S-Class, A-Class model sedans as well as ML and GL models. The company intends to produce 25,000 cars annually.

The parties are expected to sign the guaranteed investment contract (GIC), which has been in negotiation since mid-2014, within two weeks.

GICs oblige an investor to set up production at a stated time with Russia’s federal or regional authorities to ensure stability and provide necessary support.

The assembly of vehicles in Russia will allow the Germans access to state purchase contracts.

The German company currently has a joint venture with KAMAZ, which produces trucks under the Mercedes-Benz brand in Russia's Republic of Tatarstan. Daimler owns a 15 percent stake in the enterprise. Daimler also has an assembly line for Mercedes-Benz Sprinter Classic minibuses at the Nizhny Novgorod facilities of Russian auto maker GAZ Group.

As trade relations between Moscow and the EU have significantly deteriorated following several rounds of sanctions, European companies are striving to localize production in the country to avoid counter-sanctions and hold on to their share of the Russian market.