The Volkswagen Group is expanding its manufacturing footprint in Russia with a new engine plant which will commence output in 2015. The move will boost local content for VW Group cars made in Russia – something that VW is committed to under the 'Decree 166' agreement with the Russian government.

Dr Martin Winterkorn, chairman of the Board of Management of Volkswagen Aktiengesellschaft, and Anatoly Artamonov, Governor of the Kaluga province, have signed contracts in Moscow for the construction of an engine plant in Kaluga, Russia.

VW said it will invest approximately EUR250m for the new plant, where a 1.6L engine (generation EA211) will be produced locally from 2015. The capacity is set at 150,000 engines a year. The engine plant is being built next to the Volkswagen vehicle plant in Kaluga.

"Russia is the primary strategic growth market in Europe for the Volkswagen Group. By 2018 we intend to sell a half a million vehicles here annually. To this end we will once again be investing approximately 1 billion euro in local production and new models," said Winterkorn.

The engine that will be produced in Kaluga in the future is a 1.6 litre petrol engine from the EA 211 series and VW said that it 'represents the most up to date engine technology in the Volkswagen Group'.

From 2015 the engine plant will supply engines for the vehicle production of the Volkswagen Group Rus in Kaluga as well as the contract production in the GAZ plant in Nizhny Novgorod.

Crankcases, cylinder heads with assembly integrated, crankshafts as well as the complete engine assembly are all part of the production plan.

VW said that the Group is fulfilling the targets agreed with the Russian government at the end of May 2011 in the ancillary agreement to decree 166. This determines that, as of 2016, at least 30% of vehicles produced in Russia will be equipped with engines that were manufactured locally.