Mercedes-Benz has about 2 billion euros ($2.2 billion) of assets in Russia that could be at risk if Moscow decides to expropriate the property of foreign companies that leave the country over its invasion of Ukraine.
The automaker said in its annual report on Friday that the prospect of expropriation presented a risk to the company, even though the overall impact of the war could not yet be quantified.
The disclosure comes a day after Russia outlined proposed measures to take temporary control of departing companies where foreign ownership exceeds 25 percent. If adopted, Russian courts could freeze the assets, giving the companies the option of restoring operations or selling their stake.
Mercedes is among a growing list of prominent Western brands to temporarily halt business in Russia including Stellantis, Volkswagen, Ferrari and Ford Motor.
Among the Mercedes assets at risk is a factory outside Moscow that opened in 2019 with Russian President Vladimir Putin in attendance.
The facility, seen as key for access to lucrative government contracts, employs more than 1,000 people and produces the E-Class sedan and SUV models. Fitted with robots and other cutting-edge automation, the factory can produce 20,000 vehicles per year.
Mercedes said earlier this month that it was suspending production at the plant.
Russia accounts for 2 percent of Mercedes’s sales, according to an estimate from Bloomberg Intelligence. The company declined immediate comment.
Mercedes’s Russian subsidiaries also have liabilities to banks of about 1 billion euros, and the company said it has issued guarantees for the debt.
German companies have suffered expropriations from foreign governments in the past, a factor some economic historians have cited for the country’s unwillingness to invest money from its large current account surplus overseas.
After the U.S. entered the first world war, its government seized the U.S. operations of Germany’s Merck, leading to the establishment of Merck & Co, now a wholly separate pharmaceutical company.