Sources that have knowledge of the company’s plans have told Bloomberg the German automaker, the largest in European and the second-biggest in the world, will cut both production and implement voluntary termination agreements for workers at its Russian facility in Kaluga.
The persons, who spoke to the Bloomberg media service under condition of anonymity, being unable to identify themselves before an official statement, added that around 150 temporary workers won’t get their contracts extended, as the country’s car market continues to crumble. The automaker on the other hand has already dispatched at least 100 workers from Russia to Germany for training programs and will have some of the Kaluga workers transferred to an engine plant that is scheduled to begin production later this year or to a warehouse unit outside Moscow, the people added. Further on, Volkswagen plans to progress accordingly to its earlier plans when it comes to investments in Russia, even as the carmaker doesn’t forecast a recovering market in the next months, but instead believes the long-term prospects still have potential.
Global automakers have started developing contingency plans for Russia – a market once seen able to pass over Germany as Europe’s largest. Instead, the ailing economic situation and political disruptions triggered by the country’s implication in the Ukraine internal conflict have led to a crumbling economy. Consumer confidence has been deeply affected by the internal effects of the plunging local currency, sidelining big-ticket purchases, including car acquisitions. Numerous carmakers have reduced local output, increased prices of sold vehicles and ceased to import certain cars – and General Motors last week announced it would all but abandon the market.