Mercedes-Benz AG has some 2 billion euros ($2.2 billion) of assets in Russia that could be at risk if Moscow decides to expropriate the properties of foreign companies that leave the country after Ukraine’s invasion.
The German firm, which is among a growing list of prominent Western brands set to temporarily suspend business in Russia, said in its annual report on Friday that the prospect of expropriation posed a risk to the company, even though the overall impact of the war could not yet be quantified.
The announcement comes a day after Russia outlined proposed measures to take temporary control of outgoing companies where foreign ownership exceeds 25%.
If adopted, Russian courts could freeze assets, giving companies the option to reinstate operations or sell their stake.
Among the Mercedes assets at risk is a factory outside Moscow that opened in 2019 with Russian President Vladimir Putin in attendance.
The facility, considered key to gaining lucrative government contracts, employs more than 1,000 people and produces the E-Class sedan and SUV models. Equipped with robots and other state-of-the-art automation, the factory can produce 20,000 vehicles a year.
Russia accounts for 2% of Mercedes sales, according to an estimate by Bloomberg Intelligence. The company declined to immediately comment.
Mercedes’ Russian subsidiaries also have obligations to banks of around 1 billion euros, and the company said it has issued guarantees for the debt.
German companies have suffered expropriations by foreign governments in the past, a factor some economic historians link to the country’s unwillingness to invest money from its large current account surplus abroad.
After the United States entered World War I, its government seized the American operations of Germany’s Merck KGaA, leading to the creation of Merck & Co., now a completely independent pharmaceutical company.
