Moscow allows Volkswagen plant sale for €125m

The Volkswagen Group has received approval for the sale of its assets in Russia for €125 million ($136 million) to the Russian car dealer Avilon, reported dpa, quoting state media.

A corresponding application had been approved by the government commission for the control of foreign investments, Russia's Interfax news agency reported on Tuesday, citing negotiating parties.

The German car manufacturer had long been active in Russia and in 2007 opened its own factory in Kaluga in 2007, some 200 kilometres south-west of Moscow.

In spring 2022, after the Russian invasion in Ukraine, VW, along with other Western carmakers, ceased production in Russia.

Avilon will gain full control over Volkswagen Group Rus and its subsidiaries, including several companies for the sale of Scania brand trucks.

"Volkswagen AG is currently in the process of selling its shares in Volkswagen Group Rus and thus also the Kaluga plant with its more than 4,000 employees to a renowned Russian investor," the company in Wolfsburg said without providing details.

The state-of-the-art factory is considered VW's most important asset in Russia. According to Russian Deputy Prime Minister Denis Manturov, the he search for a contractor to restart the production facility is ongoing.

The sale was delayed by a lawsuit filed by VW's former manufacturing partner Gaz - known in Soviet times for building the Volga limousine. Gaz had sued VW for damages for terminating the agreement, but a court in Russia has since rejected the claim.

The withdrawal of Western car makers from Russia has led to a significant decline in vehicle production there.

According to the AEB business association, only 687,000 new cars were sold in 2022 - compared to 1.667 million the year before. In the meantime, some plants have been taken over by Russian investors; often at a symbolic price and with a buy-back option.

Last summer, for example, French car maker Renault handed over its majority stake in Lada maker Avtovaz to the Russian state for €1.