Volkswagen and GAZ sign agreement for contract manufacturing in Russia

Wolfsburg / Nizhny Novgorod - Volkswagen and the GAZ Group today signed an agreement to assemble Volkswagen and Škoda models under contract at the GAZ plant in Nizhny Novgorod. The companies already concluded a memorandum of understanding regarding joint automobile production in Russia in February 2011. The planned production volume is 110,000 vehicles per year. The agreement runs until 2019.

Under the contract manufacturing agreement, GAZ is to build the Volkswagen Jetta, Škoda Octavia and Škoda Yeti models for the Russian market. In order to respond swiftly to fast-growing demand in the Russian automobile sector, the first model to be built by GAZ, the Škoda Yeti, is to start rolling off the production line by the end of 2012.

Commenting on the agreement Prof. Dr. Martin Winterkorn, CEO of Volkswagen Aktiengesellschaft, said: "The Russian market is a growth engine for the automobile industry and an important pillar of our Strategy 2018. The quick expansion of production capacity in cooperation with GAZ will significantly strengthen the Volkswagen Group’s position on this key market."

Speaking at the signing ceremony in Nizhny Novgorod Detlef Wittig, General Representative of Volkswagen Aktiengesellschaft, said: "The agreement with GAZ is a further milestone in expanding our industrial commitment in Russia. Apart from the contract manufacturing of 110,000 vehicles per year at GAZ, we will also be expanding capacity at our plant in Kaluga in order to participate in the boom on the Russian market. We look forward to continued open and constructive cooperation with GAZ."

The collaboration with GAZ is based on an additional agreement to Decree 166 relating to customs duties benefits which was concluded with the Russian government at the end of May. Back in February, the Volkswagen Group and the GAZ Group signed a memorandum of understanding regarding joint automobile production in Russia.

Investment in production at Nizhny Novgorod will amount to some €200 million. This covers expanding and modernizing existing paint shop and assembly facilities as well as setting up a new body shop.

In addition, Volkswagen and GAZ will be implementing a comprehensive training program for employees in Nizhny Novgorod, thus ensuring that the locally produced models meet the Volkswagen Group’s global quality standards.

Photo: VW

(June 14, 2011)

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