German luxury cars keep flowing to Putin’s elite. How BMW, Mercedes, and Audi “left” Russia

In February 2022, as Russia invaded Ukraine, hundreds of Western companies pledged to exit the Russian market in protest. Yet three years later, as the war continues, the Kyiv School of Economics reports that of the 4,000 international companies operating in Russia before the invasion, only 440 – a mere 10% – have fully withdrawn.

Germany’s Big Three luxury automakers – Mercedes, BMW, and Audi – were among those who announced their departure from Russia, where wealthy Russians’ appetite for premium German cars had long fueled profitable operations. Despite EU sanctions explicitly banning luxury car exports to Russia, let’s examine what these companies promised – and what they actually delivered.

MERCEDES

Mercedes-Benz estimated its assets in Russia to be €2 billion as of the end of 2021. The Mercedes plant in Moscow, which employed 1,000 people, began operations in 2019, producing E-Class sedans and SUVs. At the end of 2021, Mercedes-Benz held a 2.6% share of the Russian car market, selling 43,000 vehicles.

On 3 March 2022, Mercedes-Benz declared that it “will suspend the export of passenger cars and vans to Russia as well as the local manufacturing in Russia until further notice.” It soon became clear that the automaker had frozen its operations in Russia and decided to withdraw fully from the market. Further notice came in October 2022 when the company announced selling its industrial and financial services subsidiary shares to a local investor, Avtodom Automobile Holding.

The deal, finalized in April 2023, included selling the Mercedes-Benz Manufacturing Rus assembly plant in Moscow Oblast and all assets of its local distributor, a corporate bank, and the brand’s leasing subsidiary in Russia.In 2022, sales in Russia dropped by 78% to 9,595 units, and 1,528 cars were sold in 2023. Mercedes retained the option to buy back its Russian business at market price, while Avtodom said it plans to produce cars under its own brand.

The German automaker later restricted access to its software for Russian car dealers, including online systems used for maintenance and troubleshooting. Although restricting access to official software somewhat complicated service and caused inconveniences for Russian Mercedes owners, market players found workarounds. For example, they can download the necessary service programs for offline use or change their geolocation to connect to the systems as if they are in another country.

The official Mercedes website in Russia is no longer operational. 

“As of 24 April 2023, Mercedes-Benz AG ceases its activities in the Russian market,” its main page states.

Despite Mercedes’s withdrawal and EU sanctions — the European Union’s export ban on luxury cars to Russia, imposed on 15 March 2022 — new cars continue to enter the Russian market through the so-called parallel imports. This means that goods can be brought into Russia via third countries without a manufacturer’s consent. According to Russian media, some carmakers are aware of parallel import schemes and even favor them.

Mercedes’s former official distributor, MB RUS, continues to sell new Mercedes cars in Russia and has introduced a warranty for vehicles brought into the country via parallel imports. In a letter to B4Ukraine, Mercedes said they conduct audits of authorized partners to minimize the risk of sanctions circumvention, while the parallel imports are beyond their sphere of influence.

“Mercedes-Benz condemns Russia’s attack on Ukraine, and our thoughts continue to be with the people of Ukraine,” the automaker said in a letter.

AUDI

In 2021, Audi sold 16,404 vehicles in Russia, a 7.05% increase from the previous year’s 15,247 units. In March 2022, Audi, like its parent Volkswagen AG group, announced the suspension of delivering cars to Russia. Audi did not have its own production facilities in the country, whereas Volkswagen decided to halt vehicle production at its two Russian plants “against the background of the Russian attack on Ukraine.” 

“The Volkswagen Group has received the news about the war in Ukraine with great dismay and shock. Volkswagen continues to hope for a cessation of hostilities and a return to diplomacy,” the initial announcement read.  

In 2023, Volkswagen sold off its local subsidiaries and a plant south of Moscow, while Audi disconnected its former dealers from its software. The deal was worth 125 million euros. According to some estimates, Volkswagen’s total investment in Russia since 2007 has amounted to 1.8 billion euros. Audi has stated that it no longer supplies cars directly or indirectly to Russia. In 2022, 3,512 Audi cars were sold in Russia; in 2023, this number dropped by 90% to 335 vehicles.

Audi’s official Russian website is currently not operational. However, unlike Mercedes, the company acknowledges that it still ships spare parts.

“The remaining minor spare parts supplies to Russia are subject to case-by-case sanction compliance reviews before each export,” the company said. 

Audi emphasizes that all its importers must take proper steps to prevent cars from being resold to Russia. However, Russians can still buy new Audi cars from the company’s former official dealer.

“There is currently no licensed importer for the import of our vehicles in Russia. If our brand vehicles have been offered for sale in Russia, they are outside the sphere of influence of AUDI AG,” the company said in a letter to B4Ukraine.

BMW

According to the Association of European Businesses, approximately 46,800 new BMW cars were sold in Russia in 2021, capturing a 2.8% share of the Russian car market.This was about 3,800 units more than Mercedes-Benz and nearly three times the sales of Audi.

At the beginning of Russia’s large-scale invasion of Ukraine, BMW released a clear statement: “We condemn the aggression against Ukraine.” However, in practice, the automaker opted for perhaps the mildest approach regarding its business operations in Russia among the Germany’s Big Three.

BMW halted vehicle exports to Russia and stopped assembly at its Kaliningrad partner facility, with official sales plummeting to just 505 vehicles in 2023. However, the company maintained a significant presence through its Russian subsidiary, BMW Russland Trading. While publicly scaling back operations and reducing staff, BMW actually expanded its footprint in July 2023 by establishing new spare parts supply lines and enlarging its “warehouse and storage” operations. The company continued providing official spare parts and warranty services, leading one Russian dealer to note in September 2023 that BMW was “feeling better than other manufacturers” in the market.

Although BMW, like Audi and Mercedes, did disconnect Russian dealers from its proprietary software, sellers say this action was largely symbolic. Russian media reports that one seller even mentioned that BMW’s representative office itself provided them with remote access to connect to dealer databases, allowing them to bypass the restriction.

BMW’s Russian website remains active and is regularly updated with new models, recommended prices of which are not listed. The website also features nearly new 2024 vehicles priced over €50,000. Official dealers listed on the BMW website continue selling used and new vehicles through their platforms. It appears that BMW continues collaborating with dealers who bring cars into Russia but insists it “has not authorized any third-party dealerships in Russia to sell new vehicles.”

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While Germany’s Big Three luxury automakers publicly suspended Russian production and exports, their actual withdrawal varies dramatically. All three brands’ cars continue flowing into Russia through parallel imports, but BMW’s approach stands out as particularly questionable.

While Mercedes made a clean break and Audi maintains a limited parts supply, BMW keeps an active Russian website advertising new vehicles and listing dealers who openly sell parallel-imported cars. Their claim of not authorizing these sales rings hollow when their own digital infrastructure facilitates them. The contrast between public statements and actions reveals how some companies maintain profitable operations in Russia while attempting to preserve their reputations in the West.

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