Daimler’s Russian growth slowed by Ukraine crisis says Zetsche

Daimler's Russian growth slowed by Ukraine crisis says Zetsche

Daimler has seen booming growth in the Russian auto market weaken due to the Ukraine crisis, CEO Dieter Zetsche told a German newspaper.

“The Russian economy was already in a difficult phase before the crisis and now it has been further impaired,” Zetsche was quoted as saying in Bild am Sonntag. “That has an effect on the Russian passenger vehicle market and also on Daimler.”

Zetsche told the paper. “In the first half-year we made an increase of 20 percent in the Russian business and now the momentum is headed downward.”

Sales of Daimler’s Mercedes-Benz cars grew by 11 percent in June, according to the latest Russian car sales figures issued by the Moscow-based Association of European Businesses.

Zetsche said the European Union’s diplomatic efforts in Ukraine, including the sanctions, deserved support, even if they burden the economy. “The primacy of politics is very clear and the economy needs to orient itself to conditions set by the government, regardless of the direct consequences.”

The EU earlier this week agreed economic sanctions against Russia targeting its banking, defense and oil sectors over Moscow’s support for pro-Russian separatist rebels in eastern Ukraine.

Germany, the EU’s largest economy, has extensive trade ties with Russia but Chancellor Angela Merkel became a firm advocate of the tougher measures against Moscow after the downing of an airliner and the death of all 298 people on board last month in an area of eastern Ukraine controlled by the rebels.

The International Monetary Fund sees Russia’s economy growing by a meager 0.2 percent this year and has warned that Western sanctions could have a “chilling effect” on investment in the country, pushing it into economic isolation.