Mazda Sells CX-5 And CX-9 Factory In Russia For Just $1

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It can buy it back within three years for the same amount.

Mazda is the latest manufacturer to ditch its manufacturing operations in Russia due to the ongoing war in Ukraine. Mazda was part of a joint venture with Russian manufacturer Sollers. The agreement between the two companies predates the Ford and Mazda divorce, though Ford announced its intended split from Sollers in March 2022.

Like several other manufacturers, Mazda sold its 50% stake in Mazda-Sollers Manufacturing Russia (MSMR) for an insignificant amount of cash, but with a clause that allows it to buy back in for the same. In this case, it was €1 - roughly $1.

A buyback clause in the sale agreement allows Mazda to quickly buy back into MSMR for the same amount within three years of the sale date.

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This is not a new phenomenon. Ford made the same deal, and Nissan got out of Nissan Manufacturing Russia LLC for the same amount. The pattern can be traced back to Renault selling its 68% stake in AvtoVAZ for one ruble. Renault has a six-year buyback guarantee, however.

While Mazda may have gained a dollar, its financial result will be impacted heavily. Mazda had a 1.8% market share in Russia, not to mention the cost of building and tooling the factory and the nearby engine plant, plus the ability to produce 50,000 units per year.

According to Mazda, the expected cost will be roughly ¥12 billion - approximately $80 million.

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The factory, located in Vladivostok (which has the largest port in Russia), was charged with producing the Mazda 6, CX-5, and CX-9. Mazda's nearby engine plant was built in 2018 and exclusively assembled Mazda's four-cylinder Skyactiv-G gas engines.

The USA is Mazda's biggest market, and the sale of MSMR is not expected to interrupt the supply chain. Mazda has several other plants dedicated to both cars and gas engines. MSMR essentially existed to produce vehicles for the Russian market.

According to a report from Automotive News Europe, Sollers will restart the plant next year with a new model range. This is hardly surprising, as the same thing happened to Renault as soon as it left the country. Sanctions are making it challenging to build cars in Russia, which means many new cars are being sold without several safety features.

Source Credits: Automotive News Europe

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