Toyota is halting production for good, and it seems Mazda is heading in the same direction.
The world was taken aback when Russia announced it would invade the democratic republic of Ukraine. Months of senseless destruction have affected innocent civilians. To curb the gruesome effects of the war, the global business community and myriad nations came together to place sanctions on Russia and its economy.
Several automakers suspended sales in the country, while Volkswagen elected to pause local production. Nearly seven months later, Putin and his posse show no signs of letting up, and many automotive giants are pulling out of the country entirely. Toyota has announced it is officially shutting down its St. Petersburg plant due to supply and material shortages.
Production was initially suspended in March, and the company has kept the factory idle since in the hopes that production could soon resume. However, Toyota sees no way forward.
The factory was paramount to the automaker's Russian operations, with the ability to produce 100,000 vehicles per year. Not only did the plant produce Camry and RAV4 SUVs for the local market, but Toyota also exported Russian-made vehicles to Armenia, Belarus, and Kazakhstan.
Toyota says it was a difficult decision to make and, according to a statement on its website, has promised to assist employees by providing them with financial support, and opportunities for re-employment and re-skilling.
"We have also determined that our operations in Moscow need to be optimized and restructured, with the clear objective of retaining an effective organization to continue supporting the retail network in providing ongoing service to existing Toyota and Lexus customers in Russia," reads the statement.
The plant may be sold, but a Toyota Europe spokesperson confirmed to Automotive News Europe that it won't build rebadged Toyota products.
2,000 workers are expected to leave the company in Russia, with a skeleton workforce left behind to assist existing customers with parts and servicing. In August, the company sold a mere 221 vehicles in Russia - which represents a 97% decline compared to the same period last year. In 2021, the RAV4 was one of the best-selling vehicles in Russia, with 38,441 examples delivered last year.
Toyota's luxury arm, Lexus, has also suffered greatly and has lost plenty of business as a result of the Russian invasion.
But it's not just Toyota that's packing its bags. Citing the Nikkei newspaper, Reuters reports that Mazda is considering a similar move. The Japanese automaker has a joint venture plant in Vladivostok and is mulling over the decision to withdraw from the country. The reasons are similar to those given by Toyota - there's just no clear way to restart Russian production.
Mazda builds the CX-5 and Mazda6 at the plant, along with a vehicle for the Russian market, sold under the Sollers brand. There's no word yet as to whether the automaker will cease vehicle sales and maintenance in Russia, but there's a strong possibility the company is pulling out for good.
The mass exodus of popular brands will lead to Russia's market being dominated by Chinese brands and locally-made vehicles, such as the Lada Granta Classic. Renault recently sold its entire Russian operation back to the government but has the option to buy it back in the next six years. In the meantime, the factory will be repurposed to build new Moskvich vehicles. It seems the future of Russian motoring is rather gloomy.