Volkswagen has said it will employ 3,500 people at its new plant in Kaluga, Russia, according to Associated Press. It has also set up a company in the country to run the project.

Volkswagen has reigstered Volkswagen Rus with regulators to oversee the EUR370m investment.

The plant is due open in the second half of 2007 with production initially focused on SKD assembly of the Skoda Octavia, at a rate of around 20,000 units a year. Production will expand to include the Volkswagen Polo, Passat and Touareg, according to Associated Press.

A bodyshop and paintshop are expected to be operational from 2009, allowing Volkswagen to produce complete vehicles, at a rate of up to 115,000 vehicles annually.