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FAQs Ukraine

What does Volkswagen say about the current developments in the Ukraine crisis?
In view of Russia’s attack on Ukraine, Volkswagen’s Group Board of Management decided at the beginning of March to stop producing vehicles in Russia until further notice. This decision applied to the Russian production sites at Kaluga and Nizhny Novgorod.

The export of vehicles to Russia was also halted at that time.

Volkswagen has taken the decision to largely suspend business activities in Russia as a consequence of the current overall situation and the great uncertainty and upheavals it means. We are keeping a close eye on further developments with the task forces we have set up for that purpose.

What impact does Volkswagen believe a lengthy conflict will have on the European economy?
The Volkswagen Group fears that the conflict between Ukraine and Russia will have a serious impact on the whole European economy.

A further, long-term interruption to global supply chains will result in considerable price increases, an energy shortage and an increase in inflation and thus have massive negative effects for European and in particular German companies.

Europe is dependent on imports of raw materials and so there might be long-term bottlenecks that would additionally hit the European economy. Sanctions and counter-sanctions will hit Russia and Europe; the USA and China will be largely unscathed. That is why the Volkswagen Group advocates a united, strong stance by the international community.

Volkswagen is now fully implementing the sanctions that have been imposed. The objective must be to achieve an end to the armed conflict in Ukraine, and in particular stop the suffering of the people in Ukraine, as soon as possible by means of negotiations between the parties on an equal footing.

What is your response to the Russian government’s threat to nationalize the Volkswagen Group’s plants and assets in Russia and put them under external administration?
The Volkswagen Group is following the discussions about expropriations with concern. Volkswagen is suspending the production of vehicles at the Kaluga plant and export of vehicles to Russia until further notice. The reasons for that include the sanctions imposed by the EU, a lack of or severely limited availability of parts from suppliers and logistical challenges as a result of the hostilities.

Please refer to question 8 as regards the situation relating to contract manufacturing at Nizhny Novgorod.

Our employees at the Kaluga plant remain employed by us and continue to be paid a reasonable portion of their wages in compliance with Russian statutory requirements while our business is suspended. The costs of that are borne fully by VOLKSWAGEN Group Rus (VGR).

We also continue to supply spare parts and fulfill our service, warranty and payment obligations within the bounds permitted by the EU’s sanctions.

What consequence does the loss of suppliers have for vehicle production?
The war in Ukraine temporarily resulted in plant closures at suppliers and, as a consequence, at the Group’s European production sites, too. As soon as the war broke out, the Group Board of Management established a crisis team. Thanks to the quick establishment of alternative production, the supply of the components in question was ensured, production stoppages were reduced and, together with the suppliers, the production of wiring harnesses at other locations outside Ukraine was duplicated.

The Volkswagen Group stands by its suppliers in Ukraine and, as befits a partner, is doing all it can to help the local companies. Production in Western Ukraine is now almost back to normal levels.

The war in Ukraine, the still difficult supply situation as regards semiconductors and the lockdowns in China with the production stoppages and supply-chain problems caused by them are having an overlapping impact on the provision of supplier parts.

What is the personnel situation like at your Russian plant?
The Group Board of Management takes its responsibility towards the affected employees at Volkswagen Group RUS very seriously. The affected employees at the Kaluga plant (a total of around 4,000) continue to be paid a reasonable portion of their wages in compliance with Russian statutory requirements. The costs of that are borne by Volkswagen.

At GAZ in Nizhny Novgorod, Volkswagen Group Rus has offered the around 220 direct employees of VOLKSWAGEN Group Rus a balanced package of benefits, which has been accepted by them. It includes financial compensation and health insurance up to the end of 2022.

What parts of the company belong to Volkswagen Group Rus? What is imported and produced?
VOLKSWAGEN Group Rus LLC is home to the Russian activities of seven brands in the Volkswagen Group: Volkswagen Passenger Cars, Volkswagen Commercial Vehicles, ŠKODA, Audi, Lamborghini, Bentley and Ducati.

The Volkswagen Group still sold around 199,000 vehicles in the Russian market in 2021. Around 170,000 vehicles were made at the company’s production sites in 2021: 118,000 units at the Kaluga plant and 52,000 at the Nizhny Novgorod plant (contract manufacturing on behalf of VW Group Rus). The total market share in 2021 was 11.9%. 11,500 vehicles were exported to CIS countries.

Has contract manufacturing at Nizhny Novgorod been closed down?
Contract manufacturing has been carried out by the GAZ automotive plant in Nizhny Novgorod on behalf of VOLKSWAGEN Group Rus since 2011. In April 2018, the U.S. imposed sanctions on the owner of GAZ, Oleg Deripaska, and his companies. Since then, operation of the GAZ automotive plant requires a General License issued by the competent U.S. agency OFAC. The last General License (GL 15L) allowed Volkswagen Group Rus to shut down operations in Nizhny Novgorod by May 25, 2022, after contract manufacturing VOLKSWAGEN Group Rus models in Nizhny Novgorod had been stopped on March 3, 2022, against the backdrop of the general political and economic situation and concomitant effects.

The ŠKODA OCTAVIA, ŠKODA KODIAQ, ŠKODA KAROQ and Volkswagen Taos were produced in Nizhny Novgorod in the past. VOLKSWAGEN Group Rus continues to supply the dealers of these vehicles produced there with spare parts and fulfills its maintenance and warranty obligations within the bounds of the sanctions imposed by the EU. As a result of the disruption of supply chains and import restrictions to Russia due to EU sanctions, the availability of some spare parts may be limited and there may be longer waiting times for repairs under warranty.

Cars produced in the Volkswagen Group’s Russian plants were also exported to the CIS countries (Belarus, Azerbaijan, Kazakhstan, Armenia, Tajikistan and Uzbekistan). We are currently working on a new strategy for supplying these markets.

Will production in Kaluga be resumed?
VOLKSWAGEN Group Rus has stopped production in Russia until further notice. We are keeping a close eye on current developments. Due to the high level of uncertainty associated with the overall situation, we are currently unable to predict when production in Russia will be able to resume.  

Further informations regarding VW Group Russia you can find on the Skoda Website through the following link: https://www.skoda-storyboard.com/en/press-releases/faq-russia-ukraine/

Contact

Nicolai Laude

Director Litigation Communications, Issue & Incident Communications
Volkswagen Group Communications

+49 (0) 5361 / 9-25097

nicolai.laude@volkswagen.de

 

Andreas Meurer

Litigation Communications, Issue & Incident Communications
Volkswagen Group Communications

+49 (0) 5361 / 9-961398

andreas.meurer@volkswagen.de

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