Russian court froze Volkswagen assets in the country as GAZ claims that Volkswagen’s attempt to exit put its own interests at risk in the market. Further seeking 15.6 billion roubles ($201.3 million) in damages as they both end the contract. However, Volkswagen claims that they both ended the contract on a mutual agreement.
Russian auto manufacturer GAZ, which was contracted to produce Volkswagen vehicles at its factory in Nizhny Novgorod, sought to halt any sale as part of a lawsuit after Volkswagen terminated the production agreement in August. Volkswagen, along with other foreign carmakers, suspended operations in Russia last year after western countries imposed unprecedented sanctions on Moscow over the conflict in Ukraine.
It has been trying to sell its Russian assets, including its flagship plant in the city of Kaluga, which has a production capacity of 225,000 vehicles a year and has been furloughed since March 2022. Russian auto manufacturer GAZ, which was contracted to produce Volkswagen vehicles at its factory in Nizhny Novgorod, sought to halt any sale as part of a lawsuit after Volkswagen terminated the production agreement in August.
Freezing assets
Volkswagen’s Russian subsidiary said it was surprised by the lawsuit and their partnership had “ended on mutually-agreed terms”. Also said, “We are aware of the claim from GAZ and are familiarising ourselves with the case materials.” It also said Volkswagen was in the process of applying to Russian state authorities for approval to sell its stake in Volkswagen Group Rus, including a plant in Kaluga with more than 4,000 employees “to a trustworthy Russian investor”.
Moscow mandates that companies from “unfriendly” countries – those which have imposed sanctions on Russia – are required to win approval from a government commission for the sale of any Russian assets. Foreign investors have feared Russia could take action to nationalize strategic assets since the restrictions on sales were brought in.
Earlier this week, Czech carmaker Skoda Auto, part of the Volkswagen Group, said it was in the final stages of a deal to sell its Russian assets. Foreign investors have feared Russia could take action to nationalize strategic assets since the restrictions on sales were brought in. Last July President Vladimir Putin issued a decree to seize full control of the Sakhlain-2 gas and oil project in Russia’s far east, effectively taking almost 50% of the project from Shell and two Japanese trading companies. Other leading Western carmakers have left the Russian market. Last year France’s Renault sold its majority stake in Avtovaz to a Russian state entity for a symbolic fee of one rouble – effectively writing off assets it previously valued at 2.2 billion euros ($2.35 billion).
