Volkswagen Group is the latest company to consider leaving Russia. According to reports, the German automaker is looking for an investor to take over its factory in Kaluga, southwest of Moscow, where production was halted shortly after the Ukraine war began.
According to reports, Volkswagen is considering a variety of scenarios for the future of its operations in Russia, including the sale of assets to a third party. No formal decision, however, has been made.
VW has invested more than 1 billion euros in the factory, which employs 4,200 people. An unnamed plant manager stated:
“With each stage of escalation, the probability that we will be able to produce there again in the foreseeable future decreases.”
The supervisory board of Volkswagen Group has concluded that, under the circumstances, a hard break is the only option.
An unnamed source close to the supervisory body says “There is a clear will for us to withdraw completely from the country.”
Martin Winterkorn, then-CEO of Volkswagen, and, to a lesser extent, Vladimir Putin, who hovered overhead in a helicopter and praised the “patriotic production,” attended the festive opening of the Volkswagen plant in 2009.
The German automaker began in Russia with models such as the VW Tiguan and Skoda Octavia.
VW halted production and sales in Russia shortly after the Ukraine war began in February 2022.
It also ended its partnership with Russian automaker Gaz, which had been a contract manufacturer for some VW models at the small Nizhny Novgorod assembly plant east of Moscow.
The report is the latest in a series of business decisions faced by automakers since the start of the war, which has snarled supply chains and resulted in a wave of sanctions against Russia.
Renault, Toyota, Mazda, and Nissan have already announced their intention to exit the Russian market.
Russia is now attempting to increase domestic production in a variety of sectors, including the automobile industry.
This year, the country intends to spend $526 million to increase domestic car part production and replace imports.
Furthermore, the massive void left by the absence of global automakers has presented Chinese automakers with a golden opportunity to seize control of the Russian car market.
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