The yard of the VW factory in Kaluga is full of freshly produced vehicles
What: Bloomberg
Around 4,000 employees work in the ultra-modern VW factory in Kaluga, southwest of Moscow. Now Europe’s largest car manufacturer is selling the factory. The work goes to the Avilon trading group.
Dhe VW Group is selling its most important factory in Russia and is withdrawing completely from the country for the time being. The plant in Kaluga will be sold to the Avilon trading group, the Wolfsburg company announced on Friday. After earlier steps in connection with the Ukraine war, the decision de facto marks the end of an independent Russia business Europe’s largest car group.
According to media reports this week VW previously received approval in Moscow to sell its assets in Russia to Avilon for €125 million. The Interfax news agency reported on Tuesday in Moscow, citing negotiating circles, that the government commission for the control of foreign investments had approved a corresponding application.
The state-of-the-art factory in Kaluga, around 150 kilometers southwest of Moscow, with a good 4,000 employees, is considered to be VW’s most important asset in Russia. According to Russia’s Deputy Prime Minister Denis Manturov, the search for a contractor from Southeast Asia is already underway to put the production facility back into operation.
The sale was delayed by a lawsuit from former VW manufacturing partner Gaz – known for building the Volga sedan in Soviet times. Gaz had sued VW for damages in the three-digit million range for terminating the agreement. A court in Russia has since dismissed the lawsuit.
The withdrawal of Western carmakers from Russia has led to a significant slump in vehicle production in the country. According to the AEB business association, only 687,000 new vehicles were sold in 2022 – compared to 1.667 million new vehicles the year before. In the meantime, some plants have been taken over by Russian investors; often at a symbolic price and with a buyback option. For example, the French carmaker Renault handed over its majority stake in the Lada maker Avtovaz to the Russian state for one euro last summer.
The contracts are signed
VW already had shortly after the attack on Ukraine production in the then two factories in Russia was suspended in March 2022. The export of vehicles to the giant country had also been stopped for all group brands, but the fundamental future of VW there remained open for the time being. Now the contracts are signed.
There were different scenarios for the factory in Kaluga. The Nizhny Novgorod Assembly Plant gave Volkswagen however, already in May. There they had operated a joint production with the Russian car manufacturer Gaz – but its co-owner Oleg Deripaska came up with Western sanctions lists. In Moscow, VW has had offices for imports, finance and sales with around 300 employees, who are also to be transferred to Avilon.
The truck and bus subsidiary MAN has finished its production in St. Petersburg. The same applies to their leasing activities. The Scania brand, which also belongs to the Traton commercial vehicle division, previously transferred its financial business to the group’s Russian company.
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