The co-owner of the carmaker Gaz, Oleg Deripaska, is on Western sanctions lists. VW manufactured at the same location as Gaz in Nizhny Novgorod, but is now ending that.

The VW group is withdrawing from production at the Russian assembly plant in Nizhny Novgorod on the Volga and is offering employees severance pay if they quit themselves.

The background to this is that the site has previously been jointly manufactured with the car manufacturer Gaz – whose co-owner Oleg Deripaska is on western sanctions lists in connection with the Ukraine war. Initially, there was a temporary exemption for continued operation, which was not recently extended, as it was said on Thursday from Wolfsburg. The Russian daily newspaper Kommersant had previously reported on the latest developments.

VW offers severance pay to 200 workers

«Employees who terminate their contract by June 17 were promised six months’ salary. Anyone who quits by June 29, five,” wrote the newspaper. A total of around 200 workers are involved, as a VW Group spokesman confirmed in the afternoon. In Nizhny Novgorod, the Wolfsburg company was previously involved in a so-called CKD production. This is not a complete construction – instead, ready-made component groups and systems are supplied and assembled into cars. It was said that there were no longer any prospects for our own colleagues in the existing contract manufacturing. “The partnership is over.”

The factory in Nizhny Novgorod, where VW had models of its core brand and subsidiary Skoda assembled until the beginning of the year, belongs to the Gaz group. In Soviet times, this was known for the Volga limousines. On May 25, US sanctions against Gaz went into effect.

So far no decision on withdrawal

VW has its own plant in Kaluga, 150 kilometers southwest of Moscow. Production has been at a standstill since March 3rd, the reason being spare parts problems due to the western punitive measures. So far, the Volkswagen Group has not announced a decision on a possible permanent withdrawal from the Russian market.

The auto industry in Russia is going through a serious crisis. Practically all manufacturers had to stop production due to a lack of parts. Even the domestic car manufacturer Avtovaz stopped production for months. After the assembly lines started up again on Wednesday, the company had to announce another interruption for at least a week on Thursday. Sales of new cars in Russia have plummeted by over 80 percent since the war began.