Photo: Catalin Garmacea
Vladimir Putin can stay on his high horse as long as he wants, but the truth of the matter is, the international sanctions taken against Russia are starting to affect his country’s economy. Sure, the world’s largest country has plenty of resources but not even they can’t last too long all on their own.
Big companies are starting to overlook the prospect of investing in the country, not because there wouldn’t be a market for their products but mostly because of the political instability. BMW said in a recent statement that it had postponed a decision regarding the building of an assembly plant in Russia. The claimed reason is the economic crisis the country is facing at the moment.
"Russia is a challenge for our company and we have asked ourselves how will things go on there," said Norbert Reithofer for reporters. He added that a decision is still to be made but at a later date.
At the moment, BMWs are being built in Kaliningrad, Russia, by Avtotor, a manufacturer that is licensed to assemble kit cars. However, the market has seen a sudden decrease over the last few months, a decrease that escalated once the Russian-Ukrainian conflict began.
According to IHS Automotive analyst Tim Urquhart, the premium market is doing far better than the overall auto market at the moment. For example, BMW’s sales dropped by only 14 percent since January while the overall car sales fell by 36 percent in Russia so far.
On the other hand, this might also be a singular problem for BMW as their rivals from Daimler, Mercedes-Benz, recorded an increase in sales of 9 percent over the last three months. To top it all off, the Stuttgart-based company is looking to built its one production facility in the country, narrowing down its choices to three locations and weighing the pros and cons for now.
A decision is to be made towards the end of the year.
"Russia is a challenge for our company and we have asked ourselves how will things go on there," said Norbert Reithofer for reporters. He added that a decision is still to be made but at a later date.
At the moment, BMWs are being built in Kaliningrad, Russia, by Avtotor, a manufacturer that is licensed to assemble kit cars. However, the market has seen a sudden decrease over the last few months, a decrease that escalated once the Russian-Ukrainian conflict began.
According to IHS Automotive analyst Tim Urquhart, the premium market is doing far better than the overall auto market at the moment. For example, BMW’s sales dropped by only 14 percent since January while the overall car sales fell by 36 percent in Russia so far.
On the other hand, this might also be a singular problem for BMW as their rivals from Daimler, Mercedes-Benz, recorded an increase in sales of 9 percent over the last three months. To top it all off, the Stuttgart-based company is looking to built its one production facility in the country, narrowing down its choices to three locations and weighing the pros and cons for now.
A decision is to be made towards the end of the year.
Google News