Source The Russian company Sollers will buy out the share of the Japanese company in the joint venture in Vladivostok. The deal was concluded for 1 euro with an option to repurchase the share within three years. Mazda has decided to leave Russia and transfer assets to the Sollers group, according to the company's financial report. The deal will be completed for 1 euro and implies the possibility of a Japanese company buying out a stake in a joint venture over the next three years.
Sollers said that the Japanese concern does not see a real opportunity to continue business in Russia. The work of the plant was suspended back in the spring, and the problem is not in logistics – it is quite convenient to deliver components from Japan to Vladivostok even now, when many supply chains have been disrupted. The plant stopped due to Japanese sanctions that prohibit the import of automotive components into Russia.
The company's downtime cost Mazda $82 million in employee salaries, equipment maintenance, and other expenses. Apparently, the automaker decided it was time to take losses, says Dmitry Chumakov, CEO of Vector Market Research.
CEO of Vector Market Research
“In the current situation, many car manufacturers prefer to choose a strategy of fixing losses in the moment in order to have some confidence that this is exactly the result will be. And now it is difficult or even almost impossible for them to establish production in Russia, to ensure the necessary supplies of components for production, they fix the current state of affairs and leave, I think, for some time the Russian market. The Russian market is one of the most promising in Europe. And so I am absolutely convinced that after some time both European and Japanese car manufacturers, which are now leaving the Russian market, will return.”
Well, in general, it’s good enough that the bulk of automotive assets is being transferred to strategic partners who are interested in the long-term development of the remaining business.
At the beginning of 2022, Mazda6, Mazda CX-5 and Mazda CX-9 were produced in Vladivostok . In 2021, 28 thousand cars were produced. Sales of Mazda vehicles topped 29,000 last year and are down 60% this year. A little less than eight thousand cars were sold from January to August.
Sollers said that at the moment the plant is preparing to release a new model line in 2023. Details have not yet been announced. Such a project could be very interesting, since the logistics of the Mazda plant has already been built to deliver cars throughout Russia, says auto expert Artem Bobtsov.
“If some kind of production is launched there, then only Chinese cars, because China is also close there. But the plant is small, and because of this, a large number of cars will not be able to be produced in any case, so we will talk about SKD, that is, they will import dismantled cars from China, assemble them back at the plant in Vladivostok and then deliver them to Russia . But economically, this can be a fairly profitable solution, since it will allow you to decently reduce the cost of cars on sale and thus gain an advantage over other manufacturers. Therefore, I would not consider this story with Vladivostok closed, most likely, it will receive some kind of continuation next year.”
It is still unclear who will service Mazda cars under warranty and supply spare parts to Russia. Either Mazda will not leave completely, but will leave its representative office in Russia, as most automakers did, or, following the example of Renault and Nissan (AvtoVAZ is now servicing these cars), it will transfer the rights to this activity to its partner in Russia, Sollers.