Volkswagen Group to close Russian factory, union says

11 months, 1 week ago - 7 July 2022, autocar
Volkswagen Group to close Russian factory, union says
German car maker blames lack of parts due to sanctions imposed on Russia after its invasion of Ukraine

The Volkswagen Group will close one of its two factories in Russia, a union has said, with the German company blaming a lack of production due to import sanctions.

Citing an announcement to staff made on Tuesday, the Workers' Association trade union said the Nizhny Novgorod factory will close due to a "lack of EU-produced parts, critically important components from Ukraine and lack of domestically made equivalents”, Automotive News Europe reports.  

The European Union imposed sanctions on Russia following its invasion of Ukraine earlier this year. 

Around 200 staff will be affected by the closure, but the bulk of these have already taken voluntary pay-offs, which included medical insurance and a claimed six months' salary.

The statement added that “disruption of logistics chains and inability to predict the terms and conditions of resumption of work" were other issues noted by Volkswagen, which suspended work at both its Russian plants in March amid the sanctions. The other factory is in Kaluga.

Speaking to Automotive News Europe, Volkswagen confirmed that it had closed its Nizhny Novgorod office on 5 July, due to a "high level of uncertainty and the inability to predict the potential resumption of production”, with 60 office staff affected. It declined to comment further on the decision. 

Although VW doesn’t own the factory, it has a contractual agreement with commercial vehicle manufacturer Gaz Group, for several of its models to be assembled there, including the VW Taos and three Skoda models: the Kodiaq, Karoq and Octavia. 

No news has yet been released on the future of the Kaluga plant, which employs around 4200 people. Before work was suspended, the Volkswagen Polo, Volkswagen Tiguan and Skoda Rapid were built by Gaz under licence, as well as the Audi Q7 and Audi Q8. Petrol engines for an array of models are also manufactured there.

At the time of the closures, Volkswagen said that it “takes its responsibility for the affected employees in Russia very seriously”.

As well as Volkswagen, ​​Aston Martin, BMW, Ford, General Motors, Honda and Jaguar Land Rover are among the firms to have halted sales in Russia.

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