motor1 — 2023-05-22
Automotive Industry
Volkswagen has announced officially it has sold its shares in Russia and is leaving the country. The German brand has reached an agreement with Art-Finance LLC, which is supported financially by the local dealer Avilon. All of VW’s local subsidiaries – Volkswagen Components and Services LLC, Scania Leasing LLC, Scania Finance LLC, and Scania Insurance LLC – will be transferred to the investor.
The automaker has issued a short press release confirming the deal has been approved by the Russian government. There’s no word about the sales price in the statement, though reports claim Avilon paid around $135m for VW’s Russian business. Probably Volkswagen's most important activity in the country – its production facility in Kaluga – is also part of the deal. The entire importer structure with distribution and sales business with associated employees is now owned by the local investor.
Volkswagen reportedly invested more than $800m to build the Kaluga plant back in 2007 and the $135m it will allegedly receive with the sale cover only a fraction of the money it invested. However, given the recent problems VW had with the local authorities, the deal could be considered a happy outcome for the automaker.
Two months ago, it became clear that a Russian court froze all Volkswagen assets in the country due to a deal it had with GAZ, a local light commercial vehicle manufacturer. Volkswagen reportedly ended its agreement with the firm in August but GAZ responded by suing the Germans for the equivalent of $201.3m for allegedly breaking their arrangement. Volkswagen stopped producing and selling cars in the country shortly after the Russian invasion of Ukraine started but selling its business proved to be a much more difficult task.
Also waiting for final approval from the government is Hyundai which has been in talks with a Kazakh company to acquire its assets in Russia. The deal has reportedly been signed between the two parties but the government needs to approve it before it goes official.