Auto Industry Assets Could Be Seized by Russian Nationalization

auto industry assets could be seized by russian nationalization

The war in Ukraine continues to have ripple effects.

A new report from industry bible Automotive News suggests Vladimir Putin is considering seizing the assets of automakers who left Russia in the wake of its invasion of Ukraine.

Ford, Mercedes-Benz, Renault, Stellantis, and Volkswagen are among the companies that left Russia behind in the wake of the fighting. Putin is apparently proposing nationalizing these and other companies, using the euphemism “external management.” Isn’t it grand how corporations and governments can use neutral-sounding buzzwords to soften the blow of misdeeds?

This is all in response to sanctions that are causing Russia pain.

“If foreign owners close the company unreasonably, then in such cases the government proposes to introduce external administration,” Russian Prime Minister Mikhail Mishustin reportedly said this month, according to CNN. “Depending on the decision of the owner, it will determine the future fate of the enterprise.”

At least one analyst thinks there’s a risk Putin and company will make good on their threats.

“I think it’s a high risk,” Joe McCabe, CEO of AutoForecast Solutions, told Automotive News. “Putin’s not shy about walking away from an industry that supports employment in his country, that builds product for local consumers. There are high odds that companies that have left, or ones that are leaving, are nationalized for the sake of his country’s economy.”

There’s a lot of money at stake — Mercedes-Benz, for example, has about $2.2 billion dollars of assets at risk of seizure, including a plant that opened near Moscow in 2019.

Analysts point out that even if Russia seizes plants, it won’t be a simple matter to restart assembly lines. That’s because Russia is cut off from global trade and wouldn’t be able to source components.

Unless, of course, it got help from a friendly nation like China. But analysts also point out the Chinese might not help the Russians, since aiding a country with inferior technology that’s waging an unpopular war might not be in China’s best interest.

The report says automakers always knew nationalization was a possibility, which is why they’ve limited their production investments in Russia. Automakers also won’t be likely to feel too much of a financial pinch.

That said, a couple of OEMs might take it on the chin more than others. Russia accounts for 2.1 percent of global car sales, but it’s 5.7 percent for Hyundai and 7.8 for the Renault/Mitsubishi/Nissan alliance. There’s also this: Analysts say that even if the plants do restart production, it will be at a lower volume than normal because of — say it with me — Russia’s economic troubles.

[Image: Ford. Note: The plant shown is in Kansas, not Russia, and the photo is for illustrative purposes.]

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  • Snickel Fritz I just bought a '97 JX 4WD 4AT, and though it's not quite roadworthy yet I am already in awe of it's simplicity and apparent ruggedness. What I am equally in awe of, is the scarcity of not only parts but correct information regarding anything on this platform. I'm going to do my best to get this little donkey back on it's feet, but I wouldn't suggest this as a project vehicle for anyone who doesn't already have several... and a big impressive shop with a full suite of fabrication/machining/welding equipment, and friends with complimentary skillsets, and extra money, and... you get the idea. If you don't, I urge you to read up on the options for replacing anything on these rigs. I didn't read enough before buying, and I have zero of the above suggested prerequisites... so I'm an idiot, don't listen to me. Go buy all of 'em!
  • Bryan Raab Davis I actually did use the P of D trope, but it was only gentle chiding, for I love old British cars of every sort.
  • ScarecrowRepair The 1907 Panic had several causes of increased demand for money:[list][*]The semi-annual shift of money between farms and cities (to buy for planting and selling harvests)[/*][*]Britain and Germany borrowing for their naval arms race[/*][*]San Francisco reconstruction borrowing after the 1906 earthquake and fire[/*][/list]Two things made it worse:[list][*]Idiotic bans on branch banking, which prevented urban, rural, and other state branches from shifting funds to match demands. This same problem made the Great Depression far worse. Canada, which allowed branch banking, had no bank failures; the US had 9000 failures.[/*][*]Idiotic reserve requirements left over from the Civil War which prevented banks from loaning money; they eventually started honoring IOUs illegally and started the recovery.[/*][/list]Been a while since I read up on it, so I may have some of the details wrong. But it was an amazing clusterfart which could have been avoided or at least tamed sooner if states and the feds hadn't been so ham handed.
  • FreedMike Maybe this explains all the “Idiots wrecking exotic cars” YouTube videos.
  • FreedMike Good article! And I salute the author for not using the classic “Lucas - prince of darkness” trope, well earned as it may be. We all know the rap on BL cars, but on the flip side, they’re apparently pretty easy to work on (at least that’s the impression I’ve picked up). On the other hand, check the panel fits on the driver’s and passenger’s doors. Clearly, BL wasn’t much concerned with things like structural integrity when it chopped the roof off a car designed as a coupe.