Russia: VW stops local production again on weak demand image

The Volkswagen Group – the second largest automaker in the world – has announced it would cease car output in Russia again because Western sanctions and the weak local economy has led to an auto sales slump.

The Russian auto market – once seen ready to tackle Germany for the top position in Europe – has seen slumping sales last year and a huge drop in deliveries in 2014 because the weak ruble has impacted the economy and consumer confidence has been further dented by the Western sanctions imposed to Moscow because of its alleged implication in the Ukrainian political crisis.

VW AG has decided to close its plant in Kaluga for five working days through Nov. 7 to lower production – a move needed to properly adjust to the “general economic market situation in Russia, ” according to a company spokesperson. The production cease is the second one, following a stoppage of ten days that started on September 8. The factory produces for the local market the VW Polo subcompact and VW Tiguan compact SUV together with the Skoda Fabia subcompact and Octavia compact.

The German group’s sales in Russia have dropped 13% during the first nine months of the year, reaching a total of 193,354 units. The decline matches the overall market drop, according to the Moscow-based Association of European Businesses (AEB) lobby group.

Via Automotive News Europe