According to the automaker, the official reason is the current geopolitical situation.
BMW is the latest in a long line of automakers to announce production disruptions following Russia’s invasion Ukraine. Avtotor’s partnership to build cars from semi-knocked down (SKD) parts has been abruptly halted “due to current geopolitical circumstances.” A company representative made the statement while speaking to Reuters.
The luxury brand has stopped exporting cars from Russia until further notice. A BMW spokesperson said The Wall Street Journal that the brand strongly condemned the aggression against Ukraine, and would continue to follow developments with concern and dismay. Due to the fact that some of our suppliers are located in war-torn Ukraine, there are likely to be production bottlenecks in other factories.
BMW’s decision not to produce cars in Russia is only weeks after it renewed its partnership with Avtotor for a further two years. Kaliningrad’s factory will be upgraded to allow for a full production cycle, not just SKD kits for the top-selling models: 5 Series and X5, X6 and /X7.
The investment of at most 32 billion RUB was approximately $414 million when the announcement was made mid-February. The Russian ruble has seen its value plummet in recent days due to sanctions imposed by the European Union. 32B RUB now have a mere $300M.
After ending previous agreements with Chery Automobile, Avtotor now does business with BMW and Kia. Before 2015, models such as the Cadillac Escalade or the Hummer H2 were made at Kaliningrad.