Russian court orders VW to pay damages
When Russia invaded Ukraine, Volkswagen took consequences. However, GAZ, Volkswagen's business partner, demanded compensation for lost contracts and undelivered engines. A Russian court ruled in favor of the contractor.
A Russian court has ordered Volkswagen to pay GAZ compensation in the billions for losses incurred due to Volkswagen's departure from the Russian market. The judges set the payment at 16.9 billion Rubles, approximately 180 million Euros. This was reported by the state Russian news agency TASS. It is unclear whether Volkswagen will pay the sum: GAZ and Volkswagen have yet to comment on the ruling.
GAZ had been a contractor for Volkswagen, producing Volkswagen vehicles in its plant in Nizhny Novgorod. When the Russian invasion of Ukraine began, Volkswagen ended the cooperation. In the aftermath, GAZ filed a series of lawsuits against Volkswagen seeking compensation in the millions.
Initially, GAZ demanded 28.4 billion Rubles from Volkswagen, in part because engines were no longer being delivered. A GAZ lawsuit to freeze Volkswagen's assets in Russia was dismissed.
Symbolic "Sale"
Volkswagen had been active in Russia for many years and opened a factory in Kaluga, about 200 kilometers southwest of Moscow, in 2007. After Russia's invasion of Ukraine, Volkswagen halted production at GAZ in Nizhny Novgorod and in Kaluga. The factory was sold to the Russian auto dealer Avilon for 125 million Euros in May 2023. Avilon gained full control over the Volkswagen Group Rus and its subsidiaries, including several companies for the sale of Scania trucks. The highly modern factory was Volkswagen's most valuable asset in Russia.
Other Western carmakers also withdrew from Russia following the Russian attack on Ukraine, often at symbolic prices. For instance, the French carmaker Renault transferred its majority stake in Avtovaz to the Russian state for one Euro. The withdrawal led to a decline in vehicle production in Russia: only 450,000 cars were produced in Russia in 2022, the lowest figure since the end of the Soviet Union.
In response to the compensation demand by GAZ, Volkswagen's Car manufacturer in Russia, Volkswagen Group Rus, announced a symbolic sale of its factory in Kaluga to local auto dealer Avilon for 125 million Euros. Despite the economic repercussions, other major Car manufacturers, like Renault, also withdrew from Russia, further impacting the Russian automobile industry, as evidenced by the production of only 450,000 cars in 2022, a record low since the end of the Soviet Union.
