Daimler considering production of passenger cars in Russia

STUTTGART/MOSCOW, April 1 Tue Apr 1, 2014 8:41am EDT

STUTTGART/MOSCOW, April 1 (Reuters) - Germany's Daimler , maker of luxury Mercedes-Benz and miniature Smart cars, is considering producing passenger cars in Russia, although no decision is imminent, it said on Tuesday.

Such a move could come at a sensitive time, after sanctions were imposed by the United States and the European Union on Russian individuals over the country's annexation of Crimea.

Several German executives have criticised the U.S. and EU strategy, fearing consequences for their businesses. Russia is Germany's 11th biggest commercial partner, with trade reaching 76.5 billion euros ($105 billion) last year.

Daimler has two partners in Russia - it owns 11 percent of truckmaker Kamaz and partners with vanmaker GAZ to produce Mercedes-Benz vans.

The group said in an emailed statement it was continuing to expand its global production network for Mercedes-Benz passenger cars close to the market and to the customer.

"In this context, we have also been looking at the basic parameters and potentials of local production of passenger cars in Russia, and have held various discussions," it said.

Daimler said talks would continue, but declined to comment on the timeframe and with whom it was holding discussions. It added there were "currently neither plans nor decisions for local production of Mercedes-Benz passenger cars in Russia."

Russia's Vedomosti business daily earlier reported Daimler was holding talks with several potential partners.

While auto sales overall in Russia have been weak, down 4 percent in the first two months of the year, sales of Mercedes cars were up 26 percent. Car sales have been falling in Russia because economic growth is faltering and they are expected to remain soft this year.

Russia is one of Daimler's top ten markets, although it does not split out sales volumes from the country. (Reporting by Ilona Wissenbach and Megan Davies; Editing by Mark Potter)

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