Russia approves termination of Sollers-Isuzu JV's special investment contract - Industry and Trade Ministry

MOSCOW. Oct 20 (Interfax) - Russia's interagency commission for special investment contracts (SPIC) has approved the termination of the SPIC of Isuzu Sollers LLC, the 50-50 joint venture between Russian automotive group Sollers and Japan's Isuzu, the Industry and Trade Ministry told Interfax.

The application to terminate the contract was reviewed and approved on October 18, the ministry said.

National daily Kommersant, citing sources in the auto industry, reported on Thursday that a company that terminates a SPIC must technically repay all preferences received from the government.

However, the CEO of Isuzu's Russian subsidiary JSC Isuzu Rus (74% owned by Isuzu Motors Ltd and 24% by Sojitz Corporation), Fabrice Gorlier told the paper last year that the joint venture did not receive compensation for Russia's vehicle scrapping fee. Preferences under a SPIC also include tax breaks, but Isuzu's office in Russia said the tax breaks were not used and the Industry and Trade Ministry confirmed this, the paper said.

Gorlier said in an interview with Kommersant at the end of 2021 that the joint venture's SPIC essentially did not give Isuzu any preferences, and he indicated even then that there were questions about the future of the Japanese company's partnership with Sollers under the joint venture. He said this was due to the review of rules for compensation of the scrapping fee for auto companies in 2019. Before, the compensation was guaranteed to all companies with a SPIC, but after the change they were linked to the level of localization.

After the termination of the SPIC, the Isuzu Sollers joint venture might be liquidated.