Volkswagen and GAZ Sign Agreement to Assemble Cars in Russia

Volkswagen announced yesterday that it has managed to sell over 2 million of its cars to customers across the globe in the first five months of the year, and emerging markets like China and Russia played a big part in the final figure. So it should come as no surprise that the German automaker needs more local assembly facilities locally.

The group signed a deal today with GAZ Group, which will see both VWs and Skoda being assembled at the Russian plant of Nizhny Novgorod.

The two automotive groups agreed upon an annual production of 110,000 vehicles, and the deal is valid until 2019.

GAZ will build the Volkswagen Jetta, Skoda Octavia and Škoda Yeti models for the Russian market. In order to respond swiftly to growing demand in the Russian automobile sector, the first model to be built by GAZ, the Skoda Yeti, is to start rolling off the production line as early as the end of 2012.

“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,” said Prof. Dr. Martin Winterkorn, CEO of Volkswagen Aktiengesellschaft.

“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,” speaking at the signing ceremony in Nizhny Novgorod Detlef Wittig, General Representative of Volkswagen Aktiengesellschaft, said.