Volkswagen Sells Its Russia Operations, Including an Assembly Plant

Author: Yuvi May 19, 2023 Volkswagen Sells Its Russia Operations, Including an Assembly Plant

The plant had capacity to turn out 225,000 vehicles a year, nearly the number of vehicles the company delivered to customers in Russia in 2021. Shortly after the invasion in February 2022, Volkswagen ceased operations at the plant. It also quit making cars at another plant, in Nizhny Novgorod, that was owned by Russian company Gaz Group but had been used by the German carmaker.

Gaz Group sued Volkswagen over the halt, seeking to freeze the German company’s assets in Russia. Last month, a court ruled in Volkswagen’s favor.

Over the past year, the Kaluga plant’s 4,000 employees remained on the payroll as they waited for information over whether they would be allowed to return to work. The idle plant was a financial drain on Volkswagen, which is scrambling to expand its electric vehicle offerings and revamp its core brand. It is also struggling to remain competitive in China, the world’s largest auto market, where the German company is losing ground to local brands.

Observers believe that large companies waited for several months to gauge the situation before making their decision whether to pull out. Large, multinational companies that had spent several decades building supply chains and networks realized that the complexity and reach of those systems made it difficult to bring them to a swift halt, said Sebastian Hoppe, a political economist at Berlin’s Free University who researches Russia.

“The more suppliers you have in Russia itself, the harder it is to pull out and the longer this whole process takes,” Mr. Hoppe said.

Carmakers in Russia will employ 300,000 people in 2021 according to the country’s statistics agency, and up to 3.5 million more are estimated to work in related industries. Those jobs have been devastated over the past year, as auto production has dropped 77 percent in large part because Western firms have decided to pull up stakes and leave.

Other multinational firms are also deciding to turn their backs on Russia. Henkel, a German maker of washing powder and other household products and Ikea, the Swedish furniture company, both sold their factories to local buyers in Russia earlier this year.

Author: Yuvi

My name is Yuvi, I work as Sub Editor at

19 May, 2023, 5:44 pm

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