FRANKFURT Aug 2 Daimler has seen
booming growth in the Russian auto market weaken due to the
Ukraine crisis, Chief Executive Dieter Zetsche said in the
summary of an interview due to appear on Sunday in Germany's
Bild am Sonntag newspaper.
The European Union earlier this week agreed economic
sanctions against Russia targeting its banking, defence and oil
sectors over Moscow's support for pro-Russian separatist rebels
in eastern Ukraine.
Germany, the EU's largest economy, has extensive trade ties
with Russia but Chancellor Angela Merkel became a firm advocate
of the tougher measures against Moscow after the downing of an
airliner and the death of all 298 people on board last month in
an area of eastern Ukraine controlled by the rebels.
"The Russian economy was already in a difficult phase before
the crisis and now it has been further impaired," Zetsche was
quoted as saying.
"That has an effect on the Russian passenger vehicle market
and also on Daimler. In the first half-year we made an increase
of 20 percent in the Russian business and now the momentum is
headed downward," he said.
The International Monetary Fund sees Russia's economy
growing by a meagre 0.2 percent this year and has warned that
Western sanctions could have a "chilling effect" on investment
in the country, pushing it into economic isolation.
Daimler produced a forecast-beating 12 percent profit
increase in the second quarter as its new Mercedes C-Class and
E-Class cars helped to lift profit margins.
Zetsche said the EU's diplomatic efforts in Ukraine,
including the sanctions, deserved support, even if they burden
"The primacy of politics is very clear and the economy needs
to orient itself to conditions set by the government, regardless
of the direct consequences."
(Reporting by Thomas Atkins; Editing by Gareth Jones)