VW will reduce production at Kaluga plant

VW will reduce production at Kaluga plant

Volkswagen will reduce production at its Russian factory in Kaluga to 150,000 vehicles this year from 200,000 originally planned, according to Automobilwoche.

A VW spokesman declined to comment on Automobilwoche’s figures but said the company was temporarily reducing production volumes at Kaluga due to the economic situation in Russia, with a 10-day shutdown due to start yesterday.

Like other Western automakers, VW has been hit by the weakening ruble and by the slump in the Russian car market following the Ukraine crisis.

Sales of VW Group brands, including the VW, Audi, Seat and Skoda, fell 11 percent to 154,606 through July, according to data from the Moscow-based Association of European Businesses. Overall sales in Russia were down 10 percent to 1.41 million in the same period.

The Kaluga factory, which is 188km (117 miles) southwest of Moscow, builds the VW Polo and Tiguan models, as well as the Skoda Fabia and Octavia.

The VW spoksman said the company remains fully committed to the Russian market and is consecutively fulfilling its investment program in Russia, pointing out that a new body shop opened at Kaluga this year and that engine production in Kaluga and a new depot near Moscow will start operating in 2015.

Automobilwoche also cited Opel’s board member responsible for sales, Peter Christian Kuespert, as expressing worries about Russia, one of Opel’s biggest markets in Europe, compounded by Moscow’s intervention in Ukraine.

“There is no doubt that the situation in Russia is a concern. The market has shrunk substantially over the past few months and the Ukraine crisis has added to the uncertainty,” Kuespert said.

Foreign carmakers have invested at least $5 billion in setting up local production in Russia since the mid-2000s. The government encouraged the trend by raising import duties on cars and lowering tariffs on parts. Besides Volkswagen, General Motors, Ford, Renault, Toyota and Hyundai are among those that produce locally.

Russia’s top automaker, AvtoVAZ, said in August it planned to cut production of its Lada cars in the coming months due to the falling Russian market.