Mercedes-Benz wants to see a significant increase in its local sales before it starts car output in Russia, where rivals BMW AG and Volkswagen AG already are producing vehicles.
"We have concluded that such an investment would not pay off given the sales volumes," Mercedes sales and marketing boss Joachim Schmidt told Automotive News Europe. The executive said that in 2011 Mercedes plans to surpass the 19,724 cars it sold in Russia last year, but added that local production would pay off "as of 100,000 units a year."
With a volume of 20,584, BMW was Russia's top-selling premium automaker last year followed by Mercedes and Audi (18,510), according to data from the Association of European Businesses. Luxury brands posted solid growth in 2010 despite having to overcome Russia's 25 percent tariff on vehicles that are not built in the country.
BMW has a contract assembly agreement with Kaliningrad-based ZAO Avtotor, which the automaker says assembled 5,544 BMWs, mainly 3 series, 5 series, X5 and X6 models, in 2010.
In late 2010, Audi ended production of models at parent VW's factory in Kaluga, where VW brand and Skoda models are built. "We do not have any plans for further production," an Audi spokesperson told Automotive News Europe. "This project was restricted to more or less one year from the beginning as we knew the statutory parameters would change."
Russia put a rule in effect this month that requires foreign automakers build at least 300,000 cars a year per production site by 2015, up from just 25,000. In return, car manufacturers will not pay import duties on car components for eight years while the local supply chain improves.