VW's idled Russian plant offers workers pay offs to leave

VW's idled Russian plant offers workers pay offs to leave

Automotive News Europe — 2023-11-30

Automotive Industry

Furloughed workers at Volkswagen's former plant in Russia are being offered pay offs to quit according to the union representing them, as the new owners struggle to find a partner to resume output six months after VW finalized its exit from the country.

The plant, in Russia's Kaluga region south of Moscow, has annual production capacity of 225,000 cars, but Russia's invasion of Ukraine brought work to a standstill. The plant will remain idle until at least March 2024, the trade union added.

In May, VW finalized the sale of the plant and its local subsidiaries to Art-Finance, supported by auto dealer group Avilon, which later renamed the factory to AGR Automotive. The price was not disclosed, but a person familiar with the matter told Reuters the deal was valued at 125 m ($137.14 m).

Limiting disruption to output and employment has been one of Moscow's key goals as scores of Western businesses have abandoned Russia, an issue that became even more acute as emigration and conscription spurred widespread labor shortages.

The factory's workers make a little more than 50,000 rubles ($562) a month on average, Elena Kryukova, head of the MPRA trade union's plant committee, told Reuters.

Under the furlough scheme being offered by the new owners, the staff are currently paid two thirds of their salary. They are now being offered three months' pay if they quit, with bonuses for those who have been employed there for a long time.

Details of the offer were first reported by Russia's Interfax news agency. Avilon declined to comment. AGR Automotive could not immediately be reached for comment.

'Doing nothing'

Only a few of the remaining staff of around 3,600 people have taken up the new owners on their offer so far, Kryukova said. "They just sit in recreation rooms, walk around the plant, socialize. They are not doing anything," Kryukova said.

Avilon has been in talks about a partnership with Chery automobile, the largest Chinese player in Russia, another source told Reuters. Chery and AGR Automotive have previously declined to comment on that.

Kryukova said a few workers were engaged in installing Russia's GPS system GLONASS in Chinese cars at the plant.

Chinese car sales in Russia appear to have peaked as domestic production recovers after the exodus of Western automakers, data shared with Reuters showed last week. However, recent growth in the market may stall as high import costs and interest rates begin to bite.

In seemingly extracting money from Russia while exiting, VW bucked the trend of other major automakers, most of which sold their assets in Russia for a nominal fee, but inserted buyback clauses that could one day allow them to return.

Renault sold its majority stake in Russia's AvtoVAZ for reportedly one ruble, but with a six-year option to buy it back. Nissan handed over its business in Russia to a state-owned entity for one euro.

Russia's government has said VW’s deal did not include a buyback clause.