FRANKFURT -- BMW has dropped plans to open a factory in Russia after talks with authorities broke down over government subsidies for the facility, a report said.
BMW failed to reach a conclusion in talks with Russian government officials over the level of economic incentives for the plant, Automotive Logistics quoted BMW's Russia chief, Stefan Teuchert, as saying.
BMW's local partner Avtotor currently builds 3- and 5-series sedans and SUVs in the Russian Baltic enclave of Kaliningrad from imported semi-knockdown kits. Former BMW CEO Harald Krueger said in 2018 that the company was considering establishing its own local production facilities in Russia.
A BMW spokeswoman declined to comment on the report, saying only that the automaker continually reviews its long-term global production.
"We see Russia as an important market for the BMW Group and are in constant contact with our local production partner Avtotor," the spokeswoman told Automotive News Europe.
BMW rival Daimler opened a factory near Moscow last year build Mercedes-Benz cars.
Mercedes was the best-selling luxury brand in Russia in 2019 with sales of 42,046, up 11 percent, according to data from the Moscow-based Association of European Businesses. BMW was the No 2 premium brand, just behind Mercedes, with sales of 41,520, up 17 percent.
While BMW's sales in Russia are small, the automaker was looking at expanding local production to maintain a reasonable balance between localized and imported models, Teuchert was quoted as saying by Automotive Logistics.