News that Volkswagen is poised to withdraw from Russia was reported by Sergey Tsyganov, who runs the Russian Car Telegram channel, and cited his own sources.
“Who comes next after Renault? It will be Volkswagen. The concern is expected to declare a final exit from Russia on May 26-27. I know the decision has been made,” he stated.
The Kaluga region governor, Vladislav Shapsha, told socialbites.ca that the regional government has not received confirmation of the German partner’s departure decision.
“We meet regularly with Volkswagen’s Russian leadership. They recently extended downtime and are planning to reorganize the component supply chain to keep operations running,” Shapsha noted.
If Volkswagen chooses to leave, the regional administration pledged to help factory workers find alternative employment. “We will identify a solution that preserves jobs,” Shapsha added.
However, sources at Volkswagen Group Rus, the company’s Russian subsidiary, indicated that the Kaluga plant’s production plan is being drafted at least through autumn. Downtime for workers has been extended to the end of May.
“The current production program anticipates automobile output resuming in September, but this could change,” a socialbites.ca interlocutor said.
neutral ground
The second Volkswagen assembly site is in Nizhny Novgorod at the GAZ plant, operated directly with Volkswagen.
Still, car production is expected to continue there.
The Russian office of Volkswagen Group told socialbites.ca that automobile production at Russian plants remains suspended indefinitely.
“We are monitoring the situation closely. Given the high level of uncertainty, there is no forecast for resuming production in Russia. Production workers are idle, and salaries are paid in line with Russian law,” the Volkswagen Group press service told socialbites.ca.
Requests for comment on Volkswagen’s possible market exit went unanswered by the company. Assembly production in Nizhny Novgorod and comments from the GAZ Group also did not provide statements on the matter.
Industry consultant Sergey Burgazliev believes Volkswagen is likely to announce a withdrawal soon, though he thinks the move might mirror Renault, which continued assembling popular models under the Moskvich brand in some form. Burgazliev suggested Volkswagen could remain in Russia through contract assembly under a different brand, or explore a buyer for the Kaluga plant with a potential repurchase option years later.
According to Burgazliev, the Kaluga plant could be valued at $350-400 million, and it could be worth exploring buyers among Chinese partners with whom Volkswagen has co-production arrangements in China. The brand itself may not stay intact in Russia, Burgazliev noted, possibly following a model similar to a standalone Jetta brand in China.
Igor Morzharetto, a Vesti FM radio columnist, pointed out that Volkswagen has invested over €1 billion in Russia and it would be unfortunate to see the decision to leave take effect. He noted that initial announcements suggested a freeze on production and sales, and given no improvement, the company may not be able to sustain wage and other payments to workers.
Morzharetto also warned that a withdrawal would impact local consumers who enjoy Volkswagen products and could affect regional incomes in Kaluga, where the main plant is located.