Volkswagen Group Rus is looking for a buyer for its Kaluga plant. This is known to the source of Vedomosti, who is familiar with the plans of the German company. He names the Asia Auto company from Kazakhstan as a potential buyer of the asset. The fact that Volkswagen is preparing its Russian plant for sale was also reported by Gazeta.ru.
Asia Auto has a license to produce Volkswagen and Skoda cars. This will keep the production of cars of these brands in Kaluga, but under the control of the Kazakhs, and the German concern will get out of direct ownership of the asset, the source explains. According to him, VW plans to decide on the sale before the end of this year.
Volkswagen Group became the leader in the rating of the largest foreign companies operating in Russia, according to Forbes for 2021. The total revenue of its subsidiaries amounted to 517 billion rubles. It is noteworthy that in third place in this rating, after Leroy Merlin, is the French automaker Renault, which has already left Russia.
The VW plant in the Grabtsevo technopark near Kaluga was launched in the SKD mode in 2007. Two years later, it switched to full-cycle car production, including welding, painting and assembly. This enterprise can produce up to 225,000 cars per year. In 2015, a plant for the production of 1.6-liter engines (capacity – 150,000 per year) was opened there, which are mainly used for Volkswagen Polo and Skoda Rapid, and are also basic for Skoda Octavia.
In addition to Polo and Rapid, the Volkswagen Tiguan crossover was also produced at the Kaluga site of the concern until the downtime, which lasts from March 2022. Skoda Octavia, Karoq, Kodiaq and Volkswagen Taos were assembled under a contract at the facilities of the GAZ group in Nizhny Novgorod. The production of German brand cars was launched there in 2012 with the Skoda Yeti model, the design capacity of the site is 132,000 vehicles per year.
This plant has also been idle since March 2022, and in July Volkswagen decided to curtail contract assembly in Nizhny Novgorod (Vedomosti). wrote about it on July 5). The representative of the German concern then spoke only about the closure of the company’s office in Nizhny Novgorod due to the high level of uncertainty and the inability to predict the potential resumption of production. GAZ Group I was going to look for an alternative download for this site.
The sanctions of the US Department of the Treasury forced to curtail the assembly at Volkswagen GAZ. Four years ago, the GAZ group was included in the SDN-List due to belonging to businessman Oleg Deripaska (also under sanctions). During this time, the US Department of the Treasury’s Office of Foreign Assets Control issued licenses to the company, which pushed back the deadline for sanctions to take effect. This allowed Volkswagen to continue assembling cars in Nizhny. The last US Treasury license expired on May 25 and has not been renewed.
Volkswagen is one of the largest investors among representatives of the foreign automotive industry in Russia. His special investment contract (SPIC), concluded in mid-2019, is estimated at 61.5 billion rubles. This is the second SPIC in terms of investments in the industry after a similar contract between AvtoVAZ and Renault, Nissan and Mitsubishi (70 billion rubles in total). Moreover, both of these contracts involved investments in technically complex products – the localization of a turbocharged engine (VW) and an automatic transmission-variator (“AvtoVAZ“). After Renault left the Volga Automobile Plant, it decided that in the fall, after revising the automotive industry development strategy, it would also revise its SPIC. This was reported to Vedomosti by the head of the company, Maxim Sokolov, at Innoprom.
In 2021, the Volkswagen Group sold 199,200 vehicles on the Russian market, 170,300 of which were made in Russia: 118,000 in Kaluga and 52,300 in Nizhny Novgorod. The group’s market share was 11.9%. In the first six months of 2022 (latest available data), sales of the group’s main brands – Skoda, Volkswagen and Audi – decreased by 72% (14,649 vehicles), 72% (14,458) and 67% (2,951) respectively , follows from the data of the Association of European Businesses.
Even despite the current situation, the Russian car market remains one of the largest in Europe, recalls auto expert Vladimir Bespalov. According to him, it is important for Volkswagen to maintain a presence on it in one form or another. But it is difficult to say now how it will look legally, the expert states.
Perhaps Volkswagen wants to get rid of a potentially toxic asset, says Sergey Burgazliev, an independent auto industry consultant. According to him, Asia Auto has an agreement with Volkswagen. The company is in the process of bankruptcy, they do not have money to buy the Russian VW plant, he is sure. The cost of the two assets (including the engine plant) was estimated by the expert at about $450-600 million, depending on the wear and tear of the equipment. According to him, Volkswagen may issue a loan to a Kazakh company for the purchase of Russian assets, which will help Asia Auto out of the crisis. But the risks are very high, says Burgazliev.
Vedomosti sent questions to Volkswagen and the Ministry of Industry and Trade of the Russian Federation.