Russia’s deadly invasion of Ukraine is now in its second week and continues to severely impact companies operating in the region. Russian President Vladimir Putin’s decision to use violence in Ukraine has particularly affected the auto industry, with Volkswagen becoming the latest automaker to cease operations in Russia.
Volkswagen announced this in a press release on Thursday, March 3rd. The German automaker opened the message by expressing its dismay and shock at the war in Ukraine and calling on Russia to end hostilities in the region.
In view of the ongoing Russian onslaught, Volkswagen AG’s Group Management Board has decided to suspend vehicle production in Russia until further notice. The temporary closure will affect Volkswagen’s production plants in Nizhny Novgorod and Kaluga.
Volkswagen suspends car exports to Russia.
In addition to halting production, Volkswagen has also decided to immediately stop exporting vehicles to Russia. Volkswagen said in a statement that “as business activity in Russia has been significantly disrupted, the Board of Directors is considering the outcome of the overall situation in this period of great uncertainty and upheaval.”
The closure of the Russian factories is a big blow for Volkswagen, as these factories play an important role in the company’s global car production. Volkswagen’s Nizhny Novgorod plant currently manufactures the Taos model, as well as Skoda’s three other models: the Karok, Octavia, and Kodiak. The company’s Kaluga plant currently assembles the Audi Q7 and Q8. It also builds the Skoda Rapid and the 2022 Volkswagen Tiguan and Polo.
The Russian automotive softwares industry is paralysed as automakers shut down operations.
Volkswagen joins Toyota, Daimler Trucks, AB Volvo, Ford Motor Company, Renault, Hyundai Group, and Mitsubishi Motors in the list of automakers that have stopped car production in Russia because of the war.
Toyota announced Wednesday that it will suspend production at its St. Petersburg plant as of Friday. This factory produces Toyota’s Camry and RAV4 models, mainly for the Russian market.
Daimler Trucks was one of the first automakers to halt operations in Russia, and on Monday it decided to end all operations in the country, including its joint venture with Russian truck maker Kamaz. Mercedes-Benz, the former Daimler parent company, also announced it would cut ties with Russia and sell its 15% stake in Kamaz. Ford announced on Tuesday that it will suspend operations in Russia until further notice due to its joint venture with Sollers.
Renault and Hyundai also announced they would suspend operations in Russia, but cited supply chain bottlenecks as the reason for the strike. With Western sanctions already in place against Russia, parts are difficult to obtain domestically, disrupting the company’s car production. Russia is a big market for both Renault and Hyundai, so if they can help, they might try not to stop their operations in Russia.
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