German car giant reveals major hit on sale of Russian business
The world’s number one car manufacturer, Volkswagen Group, has completed the sale of its Russian business unit for €125 million ($139 million), the company’s financial statement for the first half of 2023 showed on Thursday.
The German automaker finalized the sale of its stakes in its Russian business to a local investor, Art-Finance, supported by Russian car dealer Avilon. The report showed that the deal was completed on May 18.
Apart from Volkswagen Group Rus, the buyer purchased Volkswagen Components and Service, Scania Leasing, Scania Finance, and Scania Insurance.
At the beginning of 2022, the minimum value of Volkswagen’s business division in Russia was hovering at around $1.5 billion, even without taking into account intangible assets, Russian business daily RBK reported in March, citing the CEO of INFOLine-Analytics, Mikhail Burmistrov.
Volkswagen followed other major foreign auto manufacturers and suspended operations in Russia last year, after Western countries imposed sanctions on Moscow over its military operation in Ukraine.
The company’s flagship Kaluga production plant ceased operations, having incurred massive expenses. As a result, the estimated value of the entire business unit in Russia earlier this year was no more than 40 billion rubles ($436 million). The factory in Kaluga had a maximum production capacity of 225,000 vehicles per year and produced the Volkswagen Tiguan, Volkswagen Polo, and Skoda Rapid models.
The company also suspended vehicle assembly at a plant in Nizhny Novgorod belonging to a Russian commercial vehicles manufacturer. In June of 2022, some 200 Volkswagen employees in Nizhny Novgorod were offered six months’ salary for resigning voluntarily.
Last month, the former Russian subsidiary of Volkswagen changed its name to AGR Automotive Group.
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