VW to close Nizhny Novgorod plant in Russia, union says

Europe

MOSCOW – Volkswagen Group will close one of two of its production sites in Russia, where it was assembling VW and Skoda cars under contract with Russian GAZ Group, a trade union said, citing the company’s message to the plant’s staff.

VW announced in March that production at its Kaluga and Nizhny Novgorod sites would be suspended until further notice amid Western sanctions, and vehicle exports to Russia would be stopped with immediate effect.

Citing VW’s announcement to the staff made on Tuesday, the trade union “Workers’ Association” told Reuters that the German company will close its operations in Nizhny Novgorod at the plant owned by GAZ Group.

The Nizhny Novgorod plant builds the Volkswagen Taos alongside the Skoda Kodiaq, Karoq and Octavia models.

The Nizhny Novgorod factory will be closed due to “lack of EU-produced parts, critically important components from Ukraine and lack of domestically made equivalents, disruption of logistics chains and inability to predict the terms and conditions of resumption of work,” chairman of the trade union Dmitry Trudovoy cited VW’s statement to its staff.

VW declined to comment on the decision to quit production but said it would close its Nizhny Novgorod office from July 5, citing “high level of uncertainty and the inability to predict the potential resumption of production.”

The bulk of its 200 staff members at the Nizhny Novgorod plant have taken payoffs and quit voluntary and 60 people will be affected by the office closure, VW added.

According to Trudovoy, assembly equipment and other machinery will be moved to VW’s Kaluga plant which it owns directly and employs nearly 4,200 workers there.

GAZ does not plan to close the plant it owns, Interfax said on Tuesday, and the company is looking for options to fill it with other orders, as production there was temporary suspended. GAZ did not reply to Reuters request for a comment.

GAZ, under U.S. sanctions since 2018, was granted sanctions exemptions annually but its latest waiver expired on May 25 and was not renewed.

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