Volkswagen Group is looking for investors to take over its Kaluga plant in Russia, which stopped production shortly after the escalation of the situation in Russia and Ukraine. Volkswagen Group said it is considering various options for the disposal of its Russian operations, one of which is to sell the assets to a third party. The group said in a statement that no decision has been made yet.
The Volkswagen Group has invested more than 1 billion euros in the Kaluga plant and employs 4,200 people. The source said, “As the situation continues to escalate, we expect the probability of resuming production at the plant to continue to decrease in the future.”
The Volkswagen Group Supervisory Board has realized that exiting the Russian market is the only option in this situation. Sources close to the situation said, “We have a clear will to exit the Russian market completely.” It is understood that the potential collapse of local demand, practical considerations and many more factors may have prompted the Volkswagen Group to make this decision.
In June, senior officials at the Russian Ministry of Industry said that Russian car sales are expected to halve in 2022 due to supply problems facing the Russian auto industry.
Shortly after the escalation of the situation in Russia and Ukraine, the Volkswagen Group has halted production and sales in Russia. The group also ended its partnership with Russian automaker Gaz, which was producing some VW models as a contract manufacturer at a small assembly plant in Nizhny Novgorod, east of Moscow.
Photo credit: Volkswagen
The escalating situation in Russia and Ukraine has disrupted the supply chain, with Western countries issuing sanctions against Russia and many automakers pulling out of the Russian market one after another. Toyota also reportedly said last month that it would close its St. Petersburg, Russia, plant and possibly sell it. The plant, which mainly produces Camry and RAV4, has not produced cars since March.
Since the escalation of the situation in Russia and Ukraine, Russia is trying to boost domestic production in various fields, including cars. The country plans to spend $526 million this year to boost domestic production of auto parts and replace imports.