Volkswagen has signed an agreement with Russia’s GAZ Group to assemble VW and Skoda models under contract at the latter’s plant in Nizhny Novgorod. Planned production output is 110,000 vehicles per year, starting with the Skoda Yeti model, which will be assembled from semi-knockdown (SKD) kits shipped from the Kvasiny plant in the Czech Republic. The Yeti is expected to start rolling off the production line by the end of next year and 2012 output for that model will be 6,200 units.
Along with the Yeti, GAZ will also build the VW Jetta and Škoda Octavia models, all exclusively for the Russian market, and the agreement for contract building of all three models runs until 2019. The Jetta and Octavia will be completely built up at the GAZ plant.
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, Volkswagen and GAZ signed an MOU regarding joint automobile production in Russia.
Volkswagen is aiming to take advantage of the May agreement and double its vehicle production in Russia. In 2010 it increased sales in the Russian market by 40% with more than 130,000 vehicles sold, 95,000 of which were manufactured in Kaluga.
Investment in production at Nizhny Novgorod will amount to around €200m covering the expansion and modernizing of the existing paint shop and assembly facilities, as well as setting up a new body shop.
Speaking at the signing ceremony in Nizhny Novgorod Detlef Wittig, General Representative of Volkswagen Aktiengesellschaft, said: "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."
[Pictured from left: Marcus Osegowitsch, general director of Volkswagen Group Rus, Detlef Wittig, general representative of Volkswagen Aktiengesellschaft, Bo Andersson, president and CEO of GAZ Group, Siegfried Wolf, chairman of the Board/GAZ, and Prof. Dr. Winfried Vahland, chairman of the Board of Directors of Škoda Auto]