German carmaker Mercedes-Benz has severed ties with its Russian dealers by disconnecting them from its software, according to reports by Izvestia. The move comes after Mercedes suspended manufacturing in Russia back in March 2022, following the military conflict in Ukraine. The company’s distributor in Russia confirmed that access to online systems used for maintenance and problem identification has been suspended. These systems are crucial for repairs and updates for new machines. The distributor stated that the lack of access to the manufacturer’s online software systems would increase repair times, and repairs and maintenance would have to rely on accumulated experience and knowledge.
Another German car manufacturer, BMW Group, has also restricted Russian dealers’ access to its software, according to sources. Izvestia reported that the lack of official software could lead to problems with updates for new vehicles and may result in drivers seeking services from unofficial service stations and purchasing simpler car models.
Mercedes-Benz’s decision to sever ties with its Russian dealers is due to the company’s divestment from Russia, which was announced in October. The divestment was in response to Western sanctions that put Mercedes’ business operations in jeopardy. As part of the deal with the Russian government to sell its assets in the country, Mercedes-Benz included a buyback option, giving it the right to return and reclaim its business in the future. In April 2023, the company received Moscow’s approval for the sale of its assets, with automotive dealer chain Avtodom identified as the buyer.
Mercedes-Benz’s assets in Russia included the Mercedes-Benz plant in Moscow Region and Mercedes-Benz Manufacturing Rus LLC, a car leasing and insurance company. The sale of these assets marks the end of Mercedes’ manufacturing operations in Russia for the time being.
Market participants have expressed concerns about the impact of the disconnect between German automakers and their Russian dealers. The lack of access to official software may lead to longer repair times and difficulties in obtaining updates for new vehicles. It may also drive customers towards unofficial service stations and simpler car models.
This development highlights the challenges faced by multinational carmakers operating in countries affected by geopolitical conflicts and sanctions. Manufacturers like Mercedes-Benz and BMW Group have had to navigate complex economic and political landscapes, which can have significant implications for their business operations. As geopolitical tensions continue to evolve, the automotive industry will have to adapt and find innovative solutions to overcome these challenges.
Overall, Mercedes-Benz’s decision to disconnect Russian dealers from its software is a significant development in the company’s divestment from Russia. While it may result in longer repair times and other challenges, it reflects the company’s strategic response to the impact of Western sanctions on its operations in the country. As Avtodom takes over Mercedes’ assets in Russia, the future of the German automaker’s presence in the country remains uncertain.