Engage Your Visitors!

Click here to change this text. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.

Chinese Premium Auto Brand Takes Over Mercedes Benz Plant Near Moscow

The former Mercedes-Benz plant in Yesipov near Moscow will begin mass production of China’s Exeed cars, the premium brand of Chinese automaker Chery under a contract assembly agreement starting in July. Mercedes-Benz exited the Russian market in April 2023, selling their shares in the Yesipov factory to the Russian local car dealer Avtodom. Interestingly, Mercedes-Benz inserted a buy-back cause into that agreement. 

The serial assembly of the Exceed brand will begin with the VX model, with the first cars from this production beginning in August. Chery’s agreement with Avtodom sees the company being paid for each car it assembles, at about ₽45,000 per car kit. A second model should hit the production line in February 2025.

Chery have received declarations of conformity for its mass-produced Exeed M51 (model TXL) and M52 (model VX) cars, with the parts to be manufactured by the company in China, and assembled in Russia. A wider range of Chery models and sub-brands equipped with the same SQRF4J20C engine used in the Exeed VX and TXL models, as well as the Jaecoo J8 and Chery Tiggo may also be produced at the plant.

Avtodom general director Andrei Olkhovsky has said that the company has several parallel projects in place for the development of the plant with agreements already in place. “The number of partners is much larger than just the Chery group. We are ready to assemble for the Chery Group under contract as well, if necessary,” he said. The plant will simultaneously produce four to six models, he said.

According to Avtostat, Exeed is now the most popular premium brand in Russia. Sales of Exeed reached almost 3,900 units in May, while the agency estimates that sales in the entire premium segment reached 11,000 units for the month.

Moscow region governor Andrei Vorobyov said in June that the “first investor” at the Yesipov site had already assembled the first 300 cars last month. “This is a serious company; one of the leaders in the Chinese market. It wants to reach a volume of 100,000-120,000 units, including electric cars,” Vorobyov said in an interview at SPIEF-2024.

Other players are also interested in producing Chery vehicles. AGR Group (which combines the former Russian assets of Hyundai and Volkswagen) also received a declaration for the serial production of Chery cars at the former VW site in Kaluga. The declaration states that the car model planned for production is a T31 type car, with AGR indicated as the manufacturer.

Chery has repeatedly stated that production localization is a possibility. Chery Automobiles Rus reported in 2023 that it is not abandoning these plans and vehicles are being imported from China “while the company searches for and prepares production sites.” So far, Chery cars have been produced at the former Nissan plant in St. Petersburg, now part of AvtoVAZ, but under a different brand and without Chery participating in sales of the vehicles.

Avtostat’s Sergei Udalov said that the organization of any type of vehicle assembly line creates localization potential, which would make it possible to claim benefits and compensation, as well as to supply premium cars to government agencies. The premium segment is traditionally more stable and reacts more slowly to changes in the market, which makes volumes relatively predictable, he said.

Since Western auto manufacturers exited the Russia market, Chinese brands have leapt from a 5% to a 45% share of the entire Russian auto market. Last year ended with a 57.8% car sales market increase in Russia to 1.13 million units, following a 2022 slump as Western brands exited.

This year, new passenger car sales in Russia were up 109.4% year-on-year in March to 146,526 units, showing Western sanctions levelled following its conflict with Ukraine are no longer impacting the Russian market. Russia’s Q1 2024 tally is up 93% over 2023 suggesting Russian new auto sales will reach about 2 million for the year, roughly the same size as the UK new auto sales market.

Further Reading 

Scroll to Top