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Thursday, 16.06.2011
VW and Skoda soon roll off the GAZ production line
Nizhny Novgorod. The passenger car production at GAZ, once the producer of the Soviet Volga sedan, will, thanks to VW, restart later on this year. The company signed a specific agreement.
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The VW group (like Renault-Nisssan, Ford and GM) has recently committed to the Russian Government a target of 300,000 cars to be built in Russia. The groups own plant in Kaluga is not able to deliver this - therefore the Wolfsburg company wants to produce their cars through contract manufacturing elsewhere.
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The production plant a the GAZ group in Nizhny Novgorod was the ideal facility: The car plant, part of Oleg Deripaska's business empire that is in financial difficulties, had to shut down its passenger car production at the end of 2010 and produces now only light commercial vehicles.
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VW in place of “Volga” and Volga
Traditionally, GAZs passenger car division was represented only by one model -the “Volga”, the former Soviet official standard sedan, that survived from the Soviet era into the 21st century having had several facelifts and improvements. But in 2009 the Volga had to be scrapped.
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The successor, “Volga Siber” was no luckier: The Sebring, a licensed Chrysler model, was released at the hight of the economic crisis and failed. After less than 10,000 produced cars, GAZ announced the closure.
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The expensive production line for the Siber was purchased in the USA needs to be utilised - therefore GAZ and VW are almost natural allies.
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Volkswagen-middle class is unfaithful
On Tuesday, the two companies signed an eight year contract for the production of models of the VW group: later on this year the first 800 models of the crossover model Skoda Yeti are to be built in Nizhny Novgorod. In 2012 the VW Jetta and the Skoda Octavia are to be added.
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In 2015 the guest production with GAZ is to reach 110,000 cars. Volkswagen is investing € 115 million in modernisation of production facilities, GAZ group will add a value of €85 million. However, reported the newspaper “Kommersant” the plants purchased by VW will stay the property of the German company.
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GAZ will cooperate with VW, GM and Daimler at the same time VW and GAZ however have neither established a joint venture, nor did it lead to the acquisition of company shares. According to the agreement, GAZ will receive payment for every car delivered and fixed monthly payments, said Bo Andersson, head of GAZ.
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This type of partnership will allow GAZ to utilize its manufacturing facilities with models from other car manufacturers. Similarly the Deripaska enterprise has agreements in place with General Motors to produce 40,000 models of Chevrolet Aveo yearly.
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In addition to the model of the VW deal a production agreement for the Mercedes Sprinter in the commercial vehicle division is being sought by GAZ.
Kaluga plant is growing - but not for engine production
In Kaluga, the VW group produced 95,000 cars last year, which made it to be the largest foreign car manufacturer in Russia. This where currently the production of the VW models, Polo Sedan and Tiguan as well as the Skoda Fabia and Octabia takes place. The capacity of the plant is 150,000 cars and is to be increased to 200,000 over the next few years.
The new rules for the discounted import duty for car production in Russia also demand the establishment of an engine plant.
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According to the 'Kommersant', on the authority of VW insiders, this plant will be built in Nizhny Novgorod and not in Kaluga - at a cost of €300 million.
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