Volkswagen Assets Frozen by Russian Court

GAZ Demanding $201.3M in Damages

A Russian court has impounded Volkswagen’s property in the country roughly one year after the German automaker halted production as a sign of opposition to the Ukraine intrusion. VW possesses two plants situated in Russia (Kaluga and Nizhny Novgorod), and it has been striving to dispose of its possessions in Russia during the past year.

The Kaluga plant produces the Volkswagen Tiguan, Polo, Audi Q7 and Q8 varieties, while the Nizhny Novgorod facility assembles the Taos and various Skoda editions. All these models are made for the Russian populace, hence their closures did not in any manner influence North America or other regions.

Russian automaker GAZ, contracted to fabricate Volkswagen vehicles at its Nizhny Novgorod facility, has lodged a case, asserting that Volkswagen’s endeavor to leave the Russian market has drastically harmed its interests. As such, GAZ is claiming damages of 15.6 billion rubles (approximately $201.3 million).

As expected, a Russian tribunal had a reaction of freezing Volkswagen’s contributions within the nation until a judicial settlement is finalized with GAZ.

“We are cognizant of the allegation from GAZ and are currently acquainting ourselves with the relevant case documents,” VW declared in a statement, as reported by Reuters. The GAZ Group, which possesses the plant, also boasts 18 other production sites across Russia. Since 2018, it has been sanctioned by the United States. Last June, it was reported that VW proposed to the staff of Nizhny Novgorod a buy-out program to resign from their posts voluntarily.

In the meantime, Volkswagen is engaging in talks with Russian representatives in order to divest from its interest in Volkswagen Group Rus, encompassing the Kaluga factory. This is clearly an instance of a country protecting its own economic interests, though VW and various other vehicle companies have their very own valid claims as well.

Western nations have implemented harsh penalties on Russia in consequence of its lethal and catastrophic invasion of Ukraine. Partaking in business with a country that attacked its adjacent nation without warning is not ideal. The sanctions imposed by the West have had a serious effect on the Russian vehicle sector as it is dependent on Western financing, along with components and hardware, to fabricate the automobiles.

As VW endeavors to discontinue its involvement in the Russian market, its Skoda subsidiary has also verified that it is drawing near to arriving at an agreement with Russia to offload its domestic assets. Other car producers had put a stop to their activities in Russia prior to the year past, comprising of Aston Martin, Ford, GM, Jaguar Land Rover, and Volvo. Additionally, a handful of makers disposed of their Russian operations for a euro, while giving them the chance to obtain it back for the identical amount inside some years.

Porsche had to halt creation of its Macan and Panamera models due to a lack of components coming from, ironically enough, Ukraine. Any organisations from abroad enforcing sanctions on Russia are now looked upon as hostile and need acceptance from a Russian governmental committee in order to put up any possessions.

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