Volkswagen cuts production at Russian plant image

Volkswagen is cutting car production output at its plant in Kaluga, Russia, because of a weakening ruble and a decline in real wages.

The German auto manufacturer is set to lower production from the originally planned 150,000 units output to 120,000 vehicles this year, a German industry magazine reported. The Kaluga plant produces the Volkswagen Polo and Tiguan models and also the Skoda Fabia and Octavia. The magazine also added that car parts suppliers are seeing a decline in orders and are putting off investment plans in Russia.

A spokesman for Volkswagen declined to comment on the figures reported by the magazine, but stated that the company will reduce for the moment its production volumes in Kaluga due to the economic situation in Russia, with a 10-day shutdown to start on September 8.

The spokesman added that “Nevertheless, Volkswagen Group is fully committed to the Russian market and is consecutively fulfilling its investment program in Russia.”

A new body shop will be however opened at Kaluga this year and in 2015 an engine production facility in Kaluga and a new depot close to Moscow will start operating.

Foreign automakers have invested at least $5 billion in setting up production in Russia since the mid-2000s. The government encouraged this development by raising import duties on cars and lowering prices on auto parts.

By Gabriela Florea