MOSCOW - Russian President Vladimir Putin on Monday approved the sale of Mercedes-Benz's local financial services division to Russian car dealer Avtodom, nudging the German automaker closer towards fully offloading its Russian assets.

Mercedes-Benz suspended production at its factory in Russia and halted exports to the country last March, and said in October it would fully quit the Russian market, selling stakes in its Russian assets to a local investor.

Its exit is part of a exodus of global companies from Russia after Moscow sent tens of thousands of troops into Ukraine last February.

Under Russian law, Putin is required to approve the sale of stakes in Russian finance or energy ventures, while approval from a separate government commission is required for deals involving firms from so-called "unfriendly" countries that have imposed sanctions against Russia.

Putin signed an order on Monday approving the sale of Mercedes-Benz Bank Rus - the auto company's financial services arm in Russia - to Avtodom, which specialises in sales of premium vehicles.

Avtodom said it now hoped to receive permission from a separate government commission by the end of February to finalise a deal for all of Mercedes-Benz's Russian assets, including a factory outside Moscow where it will look to restore production that was mothballed almost a year ago.

Heavily reliant on Western financing and global supply chains, Russia's auto industry has been hit hard by Western sanctions.

Auto production slumped 67% in 2022 to just 450,000 passenger cars, the industry's worst showing since the fall of the Soviet Union in 1991.

The terms of the deal were not disclosed.

Several Western companies sold their Russian operations for symbolic sums, such as one rouble ($0.01) or one euro ($1.08), with some adding buy-back clauses to facilitate a possible return to Russia in the future.

(Reporting by Elena Fabrichnaya Writing by Jake Cordell Editing by Mark Potter)