The automotive industry in Russia has been on pause since the invasion of Ukraine started on February 24. Virtually every major manufacturer has quit the country or has ceased local operations and Volkswagen is no different. The German company is now trying to minimize the financial damage to its business and is reportedly offering pay-offs to local employees if they agree to quit VW voluntarily.
Reuters reports that the automaker is negotiating with its workforce at its car plant in the city of Nizhny Novogorod, offering financial compensation and medical insurance until the end of the year. Around 200 people working in the factory were offered compensation after Volkswagen announced in March this year that production in Nizhny Novgorod would be suspended until further notice. According to the available information, employees who agree to quit the company before June 17 would receive six months’ salary.
Volkswagen operates two production plants in Russia. The one in Nizhny Novgorod is not owned by the German manufacturer, which has an agreement with local automaker GAZ Group. Volkswagen Group produced the Volkswagen Polo and Taos, as well as the Skoda Kodiaq, Karoq, and Kamiq, but the assembly lines were stopped shortly after the Russian invasion in Ukraine started. VAG also owns a plant in the city of Kaluga where it employs around 4,200 people.
Volkswagen is not the only automaker struggling with its operations in Russia. Renault had to sell its controlling stake in AvtoVAZ and the plant it formerly operated is now controlled by Moscow City. There are rumors about a potential resurrection of Moskvitch, a former Soviet-era automaker. The wildest speculation even claims the brand could return as an EV automaker.
Other companies which suspended operations in Russia include Mitsubishi, Ford, Suzuki, Toyota, Honda, BMW, and others. Most of them are no longer producing and importing cars to the country as a result of the Western sanctions.