Volkswagen has followed a raft of other Western car manufacturers and officially withdrawn from the Russian market, selling all the shares of its Russian subsidiaries as well as its large factory.
The German car manufacturer struck a deal with a Moscow-based dealership by the name of Avilon. An official sales price has not been announced but reports state Avilon paid approximately €125 million ($135 million) to acquire VW’s Russian operation and its factory in the western city of Kaluga which has enough capacity to build 225,000 vehicles a year.
While Volkswagen only released a very short press release about the deal, it notes that it was approved by Russian government authorities and also includes its importer structure (distribution and after-sales business) as well as the warehousing and financial services activities with all associated employees.
Read: Hyundai May Soon Sell Russian Factories As It Finally Exits The Country
The New York Times reports that Volkswagen spent €774 million to build the Kaluga plant and that it opened in 2007 before reaching full-scale production in 2009. VW ceased operations at the site shortly after Russia’s invasion of Ukraine in February 2022. The 4,000 employees at the factory have remained on payroll ever since while waiting on information about the company’s future in Russia.
According to some industry experts, many large companies waited for several months before deciding to pull out of Russia given that many of them spent decades building supply chains throughout the country.
Car manufacturers operating in Russia had employed 300,000 people in 2021 as well as 3.5 million in related industries. Since the escalation of the country’s conflict with Ukraine, local automotive production has plummeted 77 per cent with many major car manufacturers pulling out of the market entirely.
It is unclear if Volkswagen’s deal with Avilon includes a clause that would allow it to return to Russia. Renault reached a deal to sell its 68% stake in Russian automaker AvtoVAZ last year for just 1 ruble but the agreement includes an option of resuming business in the future should it choose.
