Mitsubishi terminates assembly agreement with PCMA Rus auto plant, SIC by paying 3 bln rubles in compensation

MOSCOW. April 4 (Interfax) - Mitsubishi Motors Rus LLC (MMR), Mitsubishi's representative office in Russia, has terminated the agreement for contract production of SUVs at the Kaluga-based PCMA Rus auto plant by paying the company nearly 3 billion rubles in compensation owing to termination of assembly, the Japanese automaker's subsidiary said in a financial report.

The PCMA Rus auto plant produced the Mitsubishi Outlander and Mitsubishi Pajero Sport SUVs until the spring of 2022, with assembly and component supplies to the plant ceasing by the end of April 2022. MMR said in its annual financial report that it had officially formalized terminating the agreement for contract production with PCMA Rus on December 27, 2023. The parties signed an agreement to terminate previously existing agreements, under which MMR agreed to compensate PCMA Rus 2.946 billion rubles. MMR actually remitted compensation in January 2024.

MMR said that it had also officially terminated in December 2023 participation in the special investment contract (SIC) with Russia's Industry and Trade Ministry. The parties signed the SIC in 2019. Automobile Technologies, a new industrial partner in the Kaluga enterprise, was included in the SIC, totaling 8.6 billion rubles, at the end of 2023, as published in the Industry and Trade Ministry's open registry. The company has recently organized serial production of the Citroen C5 Aircross at the PCMA Rus auto plant.

MMR swung to a net loss of 3.9 billion rubles in 2023 from net profit of around 1.5 billion rubles in 2022, which it included in the miscellaneous expenses line item, mainly from recognizing the compensatory payment to the PCMA Rus auto plant.

MMR also reflected in the miscellaneous expenses line item the formed reserves totaling 900 million rubles to compensate for damages and consumer claims. MMR said that it has committed to compensating for claims from suppliers based on notifications that are submitted to PCMA Rus by the end of February 2027. MMR had cash reserves of around 1.9 billion rubles at mid-March 2024 after remitting compensation for terminating the assembly contract. The company estimates that this is sufficient to fulfill its obligations in the near future.