Where will the Mercedes plant be built? Russian-assembled Mercedes: seven main facts
As you know, at the moment there are two joint Russian-German production facilities in Russia, which were launched by the powerful concern Daimler AG. This is a project with Nizhny Novgorod GAZ, which produces Sprinters of the 2001 model, as well as cooperation with KamAZ, which gives the country several types of commercial trucks and buses. This is all that is produced by the famous Mercedes within our vast Motherland. However, the Germans have plans Regarding the conquest of the territory of the Russian Federation, this clearly does not end there.
For about two years now, rumors have been circulating in the press that the German conglomerate plans to launch in our country a fairly powerful enterprise to produce its famous passenger cars. The ZiL and KamAZ sites were named as the basis for this. There was also information about intentions to create production capacity in the St. Petersburg region, but the Germans were unable to reach an agreement with the government of the Leningrad region. In a word, there has been movement in this direction, but things seem to be still there.
Will Mercedes build a plant in Russia?
It seems so. In the summer of 2016, information appeared about the creation of a joint plant for the production of Mercedes cars in the Moscow region. This significant event will be discussed in this short article. But first things first.
The confidence that this will finally happen is confirmed by information received in the media from the Ministry of Industry and Trade, which stated through the deputy director of the relevant department Vsevolod Babushkin that the ministry approved the project at a preliminary stage. And it seems that the next word belongs to the leadership of the Moscow region, on which the further movement of this initiative now depends. One can only hope that the project will not die, crushed by the bureaucratic machine, as happened several years earlier in the Leningrad region.
Infrastructure
The Esipovo Industrial Park, on the territory of which it is planned to develop future production, is an area that is still in the creation stage. It is located in the direction of M10, 32 km from the Moscow Ring Road near the city of Solnechnogorsk. It is located in and an acceptable level of infrastructure preparation here will only be achieved by 2019. So there is sufficient time for appropriate approval and subsequent deployment.
To give the reader a little insight into the terminology, a definition should be given. The Esipovo Industrial Park, like other facilities under construction or at the design stage in the Moscow region, is a specially organized territory where all the necessary infrastructure for large-scale industrial production will be located. In particular, for the said park it is planned to create a power supply volume of 50 MW by 2017. As well as supplying gas, creating our own water intake and appropriate treatment facilities.
Cooperation with GAZ
Having its own Mercedes plant in Russia is a long-standing ambition of Daimler. Of the existing production facilities, the joint production in Nizhny Novgorod should be noted. Here, successful cooperation resulted in an established production line for the Sprinter light commercial vehicle.
In addition, a 2.2-liter diesel engine is produced at Russian facilities. The plant in Yaroslavl produces this engine specifically for GAZ.
KamAZ
Another successful enterprise in the Russian Federation that produces German commercial vehicles is PJSC KamAZ. It all started here with the production of cabins for Chelny trucks, produced since 1976. Although they aroused popular love, at the moment they clearly lag behind the standards dictated by the times. So, KamAZ trucks moved to the cab produced for the Actros model. Now this Mercedes plant in Russia, at the production facilities of the auto giant from Naberezhnye Chelny, produces more than 30 different modifications of trucks, as well as buses.
Localization of world auto giants
This is general information about existing Mercedes projects that are functioning normally, but all of this is the production of commercial vehicles. But what about the famous business and executive class cars, crossovers and many other body types that are still only exported to Russia? As you know, almost all global brands have already built their localizations in our country.
Among them are Toyota, Volkswagen, BMW, Mazda, Kia, Ford and some others. All of them, one way or another, invested quite significant sums in setting up car production on the territory of the Russian Federation. Here you can find both a “screwdriver” assembly and more advanced options with stamping, welding and painting.
Daimler AG project
The volume of investment in the Mercedes plant in the Moscow region has not yet been reported. But it is precisely on the basis of at least an approximate amount of investment that it will be possible to talk about what level of localization is planned by Daimler AG. For example, if the investment volume is about $10 million, then we are talking about a banal “screwdriver” assembly, which will mean a very small reduction in the final cost of the Russian Mercedes compared to the imported version. But if the amount approaches a billion, then this means a serious line with stamping of parts, welding, etc.
For example, in 2014, BMW planned to invest about one and a half billion euros in the creation of a plant in Kaliningrad. And then we were talking about deep localization and production volume of up to 80 thousand cars per year. Another thing is that nothing worked out. The crisis of the Russian automobile market did not allow the project to go beyond negotiations between the leaders of the German concern and the Kaliningrad Avtotor plant, which, by the way, now produces “Russian”-made BMWs.
Modern realities
The Mercedes plant in Russia, about which there is so much noise now, is planned against the backdrop of a serious downturn in the automobile market of our country. Since 2013, when it just began its downward movement, sales volumes have almost halved. To the credit of the Mercedes company, their position compared to other automotive giants has fallen much less. And if we take the share of sales in the total flow, then it even increased from 1.2% of the total market volume in 2012 to 3% in 2015. In 2016, this figure fell slightly to 2.6%. That is, the concern’s sales are not falling at such a serious rate as those of others.
In addition, if the Mercedes plant in Russia begins to produce the planned volumes, which, by the way, will be approximately 25 thousand cars per year, as Daimler representatives say, there is a possibility of a serious increase in the share of government procurement. Since Russian officials can only order cars produced in our country, most likely, the high demand for the brand will make it possible to significantly increase the overall sales volume due to this sales market.
Conclusion
In fact, Daimler’s ordeal in creating its own production of passenger cars in Russia, it seems, should find a worthy logical conclusion. Moreover, the great work carried out by the concern in previous years clearly gave them vast experience in how to behave with Russian officials and legislation specific to them.
The Mercedes plant in Russia, where the actual production of their cars, that is, a hybrid of KamAZ and Daimler, is located, shows that cooperation is possible. Now we can only hope that the authorities of the Moscow region will be able to agree on all the subtleties that are in short supply. For example, there is information that the Esipovo industrial park, on the territory of which, let us remind you, it is planned to create this production unit, has problems with local environmental structures, which, by the way, are against cutting down the forest where the future plant will be located.
Be that as it may, the Moscow region is interested in the emergence of a similar project on its territory. We will expect a positive decision and the subsequent start of production of modern Russian-made Mercedes passenger cars.
Now all Mercedes-Benz cars sold in Russia are imported. Local enterprises place only orders for the production of light-duty Mercedes-Benz Sprinters.
Daimler spent two years looking for a site for a plant. Among them were St. Petersburg, Nizhny Novgorod, Novosibirsk, Tatarstan, Sverdlovsk region, Moscow (at the facilities of the former ZIL automobile plant) and the Moscow region. In April 2015, the head of the Russian Ministry of Industry and Trade, Denis Manturov, said that the industrial assembly of Mercedes cars in Russia could be organized according to a quota from General Motors, which left the Russian market in March of the same year. However, no final decision was made.
Analysts are reluctant to estimate the size of investment in the Mercedes plant. The amount will depend on the level of production localization, Bespalov notes. “If the “screwdriver” assembly of cars is established there, then it will cost $10-15 million. With painting, welding and stamping, we can talk about hundreds of millions of dollars,” Bespalov believes. For example, in 2014, BMW planned to build its own plant with a capacity of up to 80 thousand cars in the Kaliningrad region for €1.5 billion, said then the president of the Kaliningrad Avtotor plant (assembles Kia, Hyundai and BMW cars under contract) Valery Draganov. But later in the crisis, BMW postponed the decision to build the plant indefinitely.
The crisis is not a hindrance
The bulk of automakers built their production facilities in Russia from 2005 to 2013 (the last to be opened was the Mazda assembly plant in Vladivostok by Vadim Shvetsov’s Sollers group). Since 2013, automakers have only upgraded equipment and built auxiliary facilities. For example, at the end of 2015, Ford Sollers and Volkswagen opened engine factories, investments in which amounted to $275 million and €250 million.
Daimler plans to build a plant against the backdrop of the collapse of the Russian car market. Since 2013, when stagnation began, the local market has shrunk by almost half. At the end of last year alone, sales of passenger cars and light commercial vehicles (LCVs) decreased by almost 36%, to 1.6 million units; in January-May 2016, by another 14%, to 548 thousand vehicles. Mercedes sales over the same time decreased by 15 and 17%, respectively, to 41.6 thousand and 15.8 thousand cars.
In general, for 2016, according to PwC, the fall in the car market could be 15%, according to Vladimir Bespalov from VTB Capital - 5-10%.
Mercedes sales are not falling at the same rate as the rest of the market, and Daimler’s own plant will reduce Daimler’s costs and increase profitability, Bespalov explains. In addition, local production will allow the brand to participate in government procurement (currently officials and civil servants are prohibited from buying cars produced outside of Russia), adds Sergei Udalov, executive director of Autostat.
Other automakers operating in the Russian market have not yet announced investment plans.
A representative of AvtoVAZ (the largest Russian automaker) says that the plant already has enough capacity (more than 1 million cars; load is about 40%). The Tolyatti Automobile Plant has been optimizing its personnel since 2014; to date, about 27 thousand people have left the company. In addition, since February of this year, AvtoVAZ has been operating on a four-day work week, and from June 6 it is announcing additional downtime on individual conveyors.
Volvo Cars does not plan to open production either (it does not have its own facilities in Russia), the company’s press service said. A KIA representative notes that the company already assembles almost all models in Russia (except for the Picanto): “In the current market situation, we have no plans to expand production or build new production sites in Russia.” Other automakers did not respond to RBC's requests.
One of the largest automakers operating in Russia, the Volkswagen concern, has achieved the required level of localization provided for by the agreement on industrial assembly, said the head of the Russian representative office of the automaker, Markus Ozegovich. The company has not yet announced plans to increase the level of localization.
Hyundai Motor Manufacturing Rus (assembles Hyundai and Kia cars) announced that in 2016, about $100 million will be invested in the modernization of the plant in St. Petersburg; two new models are being prepared for release here - the Hyundai Creta crossover and the new Solaris.
Mercedes will assemble one sedan and three crossovers at its own plant in Russia. The German side chose the Esipovo industrial park (40 km from Moscow) as the site for the construction of the plant. The assembly site, which will attract more than a thousand workers, will work using a full cycle method with welding and painting of bodies. The plant will be managed by a new company, Mercedes-Benz Manufacturing Rus, headed by Axel Bense. In total, until 2019, the “Germans” will invest 250 million euros (about 15 billion rubles) in the plant.
During today's laying of the first stone, it was said that the cars will begin to roll off the assembly line in 2 years - in 2019. For this purpose, 95 thousand square meters of production and warehouse buildings and a test track will be built on an area of 85 hectares.
Moscow Region Governor Andrei Vorobyov, who was present at the groundbreaking ceremony, said that the project to create the plant had received the approval of President Vladimir Putin.
When Mercedes approached us, it was a big challenge for all parties involved. Then I turned to President Putin for advice, and he blessed this project, says Andrei Vorobyov, governor of the Moscow region.
The governor also expressed confidence that the first cars will roll off the assembly line within the specified time frame. At the same time, he added that the Moscow region has reserved additional space in case the German side needs expansion.
In addition, it became known which models will be produced by the Moscow region plant: this is the E-class, as well as a whole line of crossovers - GLC, GLE and even the flagship GLS. According to representatives of the brand, there are no plans to assemble other models using the “screwdriver method”. Also, the company does not yet have plans to export products that will be produced at the new plant.
According to the general director of Mercedes-Benz Manufacturing Rus, Axel Bense, it is still difficult to talk about how the company’s pricing policy may change after the plant is commissioned. “Ultimately, everything is decided by the market, there is still a long time ahead until 2019 to make any assumptions,” he noted.
Let us recall that at the beginning of January, the head of the Ministry of Industry and Trade of the Russian Federation, Denis Manturov, told reporters that, starting next year, the German company Daimler will begin to build a plant in the Moscow region: “It traditionally takes about three years to start producing cars themselves,” the official added then. A month later, the governor of the Moscow region announced via social networks that the contract for the construction of a Mercedes-Benz passenger car plant had been signed by the Moscow region authorities, and a total of nine signatures appeared on the document.
Reference:
Industrial Park "Esipovo" is the first state industrial park in the Moscow region. Located in Solnechnogorsk district and occupies 284 hectares of industrial land. All conditions have been prepared here for the placement of high-tech, environmentally friendly enterprises in various industries: pharmaceuticals, food industry, building materials, technology, etc. In addition, Esipovo provides opportunities for the construction of logistics facilities. The industrial park is designed to promote the development of industry and the country's economy, attracting large investors and providing support to new enterprises.
The new industrial park "Esipovo" in the Solnechnogorsk region is ready to provide new enterprises operating in Moscow and the Moscow region with energy and gas networks.
- Site area: 284 hectares
- Electricity supply: 2014: 10 MW 2015-2017: 100 MW
- Gas supply: 20,000 m3/hour; 175.2 million m3/year
- Water supply: Own water intake on the territory of the industrial park Planned: 4000-6000 m3/day
- Water disposal: Own treatment facilities Planned: 4000-6000 m3/day
- Possibility of connection to a freight railway station: Yes
June 20, in the Esipovo industrial park, Solnechnogorsk district. The event was attended by the Governor of the Moscow Region Andrei Vorobyov and the Minister of Industry and Trade of the Russian Federation Denis Manturov. Read about what the future plant of the German automaker will be like and how production will be carried out within its walls in the portal’s materialmosreg.ru.
The ceremony of laying the first stone for the foundation of the Mercedes-Benz passenger car plant took place on June 20 in the Yesipovo industrial park in Solnechnogorsk district. The ceremony was attended by the Governor of the Moscow Region Andrey Vorobyov, the Minister of Industry and Trade of the Russian Federation Denis Manturov, the member of the board of directors of the Mercedes-Benz Cars division responsible for production and supply chain management, Markus Schäfer and the Ambassador of the Federal Republic of Germany to the Russian Federation Rüdiger von Fria. Before the ceremony, guests inspected the cars that will be produced at the plant.
How it all began
“Today is a solemn and exciting day for us. Probably the same as for Mercedes. There are more than 200 German companies operating in the Moscow region - large, family-owned, small, all of them are successful. I will not hide that the president of our country was especially inspired when Mercedes approached us. He blessed. We offered Mercedes special conditions,” Vorobiev said during the ceremony.
Plant construction
Construction of the new plant will begin from . As the governor noted, this is the most complex facility with expensive equipment. When constructing the facility, Mercedes-Benz management relies on so-called fully flexible assembly. It is expected that the plant will launch a full-cycle production of premium-segment passenger cars and SUVs, including the localization of technological operations such as welding, painting, vehicle assembly, as well as the implementation of a chain of logistics operations.
The plant's production capacity will be designed for maximum flexibility so that multiple vehicle platforms can be efficiently produced on one line. The plant will have a material handling and production equipment concept. Automatic self-propelled trolleys will deliver components to assembly line sections throughout the workshop, making it possible to effectively integrate various body types and modifications, as well as their derivatives, into mass production. And thanks to the so-called one-roof concept, transport routes between production sites will be shortened, production cycle times will be optimized and production distances for employees will be reduced.
Production and prospects
The technical launch of the plant is expected at the end of 2018, at the beginning of 2019 from the production line of the enterprise. Moskovia will produce cars in a flexible manner. The company plans to start production with E-class sedans. Then the production of SUVs GLE, GLC and GLS will be gradually launched. Daimler guarantees investments of over 250 million euros. The newly created Mercedes-Benz Manufacturing Rus (MBMR) company under the leadership of Axel Benz will be responsible for production.
As Vorobiev previously noted, thanks to the construction and launch of production of the German auto giant, it will be created in the Moscow region. In the future, training of highly qualified personnel to work at the plant will begin in the Moscow region. Currently, the regional authorities are engaged in adaptation aimed at teaching students how to work with robotics.
Nadezhda Osodoeva
Construction of a plant for the production of Mercedes-Benz passenger cars began on Tuesday, June 20, in the Moscow region. The first stone for the foundation of the future industrial giant "Moskovia" in the industrial park "Esipovo" was laid by representatives of the company, the Minister of Industry and Trade of the Russian Federation Denis Manturov, the governor of the region Andrei Vorobyov and the Ambassador of Germany to the Russian Federation Rüdiger von Fria.
Governor of the Moscow Region Andrey Vorobyov, Minister of Industry and Trade of the Russian Federation Denis Manutrov and member of the board of directors of Mercedes-Benz Cars, Daimler AG Markus Schäfer. Photo: Ilya Pitalev / RIA Novosti
According to Vorobyov, the project to create the plant was “blessed” by President Vladimir Putin. “I will not hide that when Mercedes approached us, I took advice from the president. And he blessed this project. We offered Mercedes special conditions,” the governor said during the ceremony. And he assured that the first cars will roll off the production line of the enterprise in the first quarter of 2019.
Meanwhile, the company has revealed a secret: they will produce a new enterprise, Mercedes-Benz Manufacturing Rus, in the Moscow region. First it will be the E-Class sedan, with partially autonomous driving technology, and then the GLE, GLC and GLS SUVs. It is noted that the “fully flexible assembly” system being introduced will allow cars with different platforms to be made on the same line.
This is what the Moskovia plant will look like. Photo: Mercedes-Benz Press Service.
The Germans are ready to invest more than 250 million euros in the project, stipulating that the construction of a Russian plant will strengthen the company’s “global competitiveness.” There are also more local, but interesting tasks: “As representatives of a socially oriented business, we also want to go beyond purely production boundaries and establish direct connections with residents of the Moscow region in order to become part of the local community,” said Axel Bense, head of the production site.
More than 1,000 people will work at the Moskovia plant. They will begin to be hired at the end of the year, mainly from among residents of the region. A number of employees will undergo training not only in specialized educational institutions in the Moscow region, but also at other enterprises of the concern in Europe.
Mercedes-Benz already produces light commercial vehicles in Russia in Nizhny Novgorod.