Toyota may sell Russian car plant

TOYOTA will toe the line set by other car-makers who have already left Russia announcing this week they will close their Russian plant and may sell it.

Citing Russia’s invasion of the Ukraine and consequent component and materials shortages Toyota said in a statement that it would close the St Petersburg plant which builds the Camry and RAV4. The plant has been idle since March, a couple of weeks after February’s invasion.

Additionally, Toyota has also stopped vehicle imports into Russia.

The giant Japanese car-maker said last week that over the last six months it has kept the factory ready to resume production if circumstances allowed but it now sees no indication that it can restart output in the future.

According to a report in Automotive News Europe (ANE): “The factory has a capacity of 100,000 units a year. It produced the Camry midsize sedans and RAV4 midsize SUVs for the Russian market with exports to Belarus, Kazakhstan and Armenia.”

Unlike the McDonald’s hamburger experience where shuttered Russian McDonalds outlets were reopened under Russian ownership/management selling a Russian version of fast food, Toyota says if their plant is sold, it (the plant) will not build rebadged versions of the Camry and RAV4.

Honouring its obligations to existing Toyota and Lexus owners, the company said it will keep a smaller, restructured organisation in Russia to provide ongoing service to customers.

Toyota has 2350 people employed in Russia most of them furloughed since March. About 1900 work at the St Petersburg plant and about 450 are employed in Moscow to oversee marketing, sales and finance operations.

Employees will be offered assistance for re-employment, re-skilling and well-being in addition to financial support above legal requirements, Toyota said.

“We think about 2000 people will leave Toyota in Russia,” a Toyota spokesman told ANE.

“The workforce retained in Moscow will mainly continue to help existing customers in Russia with parts import and distribution.”

Toyota sales have dwindled since March with only 221 vehicles sold in Russia in August, down 97 per cent on the same month last year, according to a Moscow-based automotive statistician. The total market fell 62 per cent to 41,698 units.

Last year, the St Petersburg plant built 42,235 RAV4s and 38,547 Camry sedans, according to Toyota.

RAV4 was the eleventh best-selling model in Russia last year with 38,441 units sold outpacing Camry sales of 31,983 units for the same period.

Toyota has a considerable history in Russia opening its factory in December 2007 after a 38 billion rouble investment ($A1.0 billion) at current exchange rates.

Russia’s February invasion of Ukraine precipitated a mass corporate exodus from Russia, leaving behind assets worth billions of dollars, car-makers included. ANE reports that Volkswagen and Nissan are among car-makers that have suspended production, furloughed workers and halted imports, leaving a gap in the market for Chinese car companies.

Yale School of Management data suggest more than 750 companies have announced they are curtailing operations there to some degree. 

The latest car-maker opting for cessation was Renault in May which sold its majority stake in AvtoVAZ, Russia's biggest automaker and owner of the Lada brand, to a “Russian science institute” reportedly for just one rouble (two cents) with a six-year option to buy it back.

After the sale, Russia’s minister for trade and industry, Denis Manturov, said of the included buy back clause: “the French firm will probably have to stump up more than a solitary rouble.”

“If we make any investments during this period, it will also be taken into account. There will be no presents,” said Mr Manturov.