The ongoing economic crisis suffered by Russia has given pause to a decision by BMW to build an assembly plant in the ailing nation.
CEO Norbert Reithofer said Russia is “a challenge” for his company to overcome, Automotive News Europe reports, leaving the execs to wonder “how things will go on there.” The company’s sales in the market fell 14 percent over Q1 2015. The overall market itself dropped 36 percent over the same period, with the luxury market buoyed by wealthy consumers investing in hard goods.
While BMW is backing off on its decision to build a factory, rival Mercedes-Benz – whose sales climbed 9 percent over the first quarter – is looking over three potential sites in Russia for a new factory.
At present, BMW’s Russian market models are assembled from kits by manufacturer Avtotor in Kaliningrad under contract.
[Photo credit: BMW Russia/Facebook]
Even when they make a mistake, BMW isn’t stupid.
This makes me wonder about Ford of Europe’s decision to double-down in Russia. Well, maybe not with Jim Farley in charge. But I do question the judgement of Fields and the board.
GM made the right call on this one. Russia in general and Putin in particular are too unpredictable to justify heavy long-term investment.
The market potential is so large that greed often gets in the way of good sense.
So BMW supplied you with a photo of the view that Boris Nemtsov saw while walking on that bridge moments before his death a couple of months ago.
Just tells you how in-tune BMW is.
Good catch! I haven’t been in Moscow for 20 years, but it certainly that view.
I actually was looking for a photo that featured a BMW product in a scene that screamed “Russia,” preferably from an official channel; BMW Russia’s Facebook had what I needed.
That said, I never even heard of Nemtsov, let alone what happened at that spot.
Interesting that they assemble in Kaliningrad. Can’t figure out if that’s the best or the worst place to live in Russia. Being surrounded by the EU could be seen as a plus or a minus.
On a side note I don’t believe luxury brands have seen a drop in sales.
On the ground here in Russia nothing looks to have changed much.
Probably because of proximity to other suppliers?
Putin is a nut job. Russian billionaires have been leaving for some time now. Real estate has been booming in Miami and NY with the help of people leaving Russia.
They’re not leaving yet. They’re creating small stashes of wealth in a foreign country so that if the regime cracks down on them, they could escape and hang onto at least some assets that Kremlin can’t take away. And Florida was a very attractive piece of real estate during the last housing crisis.
I’m not sure that Russia is ‘ailing’ so much as ‘bleeding out from multiple gunshot wounds to the foot’.