Daimler Gaz JV start working on their production of Mercedes Benz vans in Russia

Daimler AG and GAZ Group will be investing over €190 million to ensure production of engines and Sprinter components in Russia. This partnership deal was made public and will be a giant step in the production of these components and engines especially for the Russian markets. Besides this, joint endeavors will also see Gorky Automobile Plant being upgraded with Mercedes Benz Sprinter going into production at the Plant situated in Nizhny Novgorod, Russia.

This agreement came into effect in May 2012 and will get underway as soon as all other terms and conditions are met. Initially Mercedes Benz Sprinter T1N will go into production along with engine and other components. While Daimler will be investing €100 million GAZ Group will be adding another €90 million to the project.

Besides this plan, these two companies are also in the process of planning to localize Mercedes Benz engines at the GAZ production site situated in Yaroslavl. These plans will stabilize the company’s market position in Russia besides offering them enhanced growth possibilities in the future.

Russia is poised to be one of the major markets where midsized and large vans are concerned. Sales in Russia are at 150,000 units per annum while estimates reveal that this figure should reach 300,000 by 2020.

Auto News Release

Daimler and GAZ start implementation of Mercedes-Benz vans manufacturing in Russia

Daimler AG to invest more than €100 million, GAZ to invest over €90 million.

Plans also call for local production of engines and other Mercedes-Benz Sprinter components

Volker Mornhinweg, Head of Mercedes-Benz Vans: “The partnership with GAZ will take us a big step forward in the promising Russian van market.”

Bo Andersson, President/CEO of GAZ Group: “The cooperation with Daimler will enable us to upgrade manufacturing capacities and processes of Gorky Automobile Plant”.

Daimler AG and Russian commercial vehicle manufacturer GAZ Group, a part of Russia’s biggest business group Basic Element, have started implementation of the project to set up Mercedes-Benz Sprinter production at Gorky Automobile Plant in Nizhny Novgorod, Russia.

The companies are cooperating under the terms of the agreement that came into force in May 2012 after a number of prerequisites agreed upon by the partners had been met. The signing brought the negotiations, which had commenced after a Memorandum of Understanding was signed at the end of 2010, to a successful conclusion.

The parties plan to localize the well-proven Mercedes-Benz Sprinter T1N, as well as the engine and other components. In its partnership with GAZ, Daimler will invest more than €100 million in the product adjustment, production processes and sales network. GAZ Group will invest over €90 million in the project.

In the framework of cooperation both companies are also planning to localize Mercedes-Benz engines at GAZ Group’s production site in Yaroslavl. GAZ Group’s new plant conforming to the advanced international standards was constructed at the end of 2011 to produce YaMZ-530 Euro-4 engines.

Commenting on the prospects of the joint project to assemble Mercedes-Benz vehicles at GAZ, Volker Mornhinweg, Head of Mercedes-Benz Vans, said today at the St. Petersburg International Economic Forum, “The partnership with GAZ will take us a big step forward in the promising Russian van market. For Mercedes-Benz Vans, Russia is an important future market that offers us good growth opportunities. That is why we want to produce our vans for Russia locally and cater to local customer preferences.”

According to experts, Russia will become one of the world’s largest sales markets in the midsize and large van segments by 2020 with the annual volume of around 300,000 units. Russia’s market volume for this segment today is already about 150,000 units.

Bo Andersson, President and CEO of GAZ Group, said, “The cooperation with Daimler will enable us to upgrade the manufacturing capacities and processes of Gorky Automobile Plant. And we are already on the way: in May 2012 a contract was signed with Germany-based Eisenmann, the leading international supplier of systems for the automotive industry, to supply a new paintshop for more than €50 million Euro. The new technology will ensure full conformance with Daimler standards in the paint process at GAZ, and will also be used for the model range of Gorky Automobile Plant.”

Start of Mercedes-Benz Sprinter production at GAZ in Nizhny Novgorod is scheduled for the first half of 2013. GAZ has started preparation of its production facilities for the joint project. GAZ employees are being trained at Daimler plants in Germany.

Daimler will organize the vehicles sales and service through the existing Mercedes-Benz dealership network, which will grow significantly in the future.