Volkswagen Group Rus and GAZ have signed an extension of their manufacturing agreement for Volkswagen and Škoda cars in Russia to 2025.

In addition, the Volkswagen brand is to supply 2.0 TDI engines for GAZ light commercial vehicles.

The deal was inked in Nizhny Novgorod in front of Russian Minister of Trade and Industry, Denis Manturov, the Governor of Nizhny Novgorod, Valery Shantsev and representatives of Volkswagen Group Rus.

The new agreement extends the joint project until 2025, defines the model versions to be produced in Nizhny Novgorod and sets out plans to adapt GAZ production capacities for the launch of new models for Volkswagen Group Rus.

The cooperation between Volkswagen Group Rus and GAZ Group started in 2011 with the signing of an agreement for the contract assembly of Volkswagen and Škoda cars at the GAZ plant.

In the project, new assembly and body shops were built at GAZ, the paint shop was modernised, logistic and quality control systems were improved and production of components for Volkswagen and Škoda vehicles was established.

GAZ personnel were trained at Volkswagen and Škoda plants in Germany and the Czech Republic and a new training centre was opened at GAZ.

The total number of cars produced so far under the cooperation between Volkswagen Group Rus and GAZ Group totals some 200,000. This includes the Volkswagen Jetta as well as Škoda Yeti and Octavia produced in Nizhny Novgorod.

“We are extending our successful partnership with GAZ Group for contract manufacturing because local production has always been a key element of the Volkswagen Group’s long-term development strategy in Russia said Volkswagen Group Rus general director, Marcus Osegowitsch.

“Even during last three crisis years we continued to develop our business in Russia, investing an additional EUR500m (US$557m) in production and facilities. We are proud to be part of the Russian automotive industry, to support its development, and to provide new jobs.”

Maximum annual production capacity at the Gorky Automobile Plant is around 132,000 vehicles, while total investment in equipment and infrastructure amounts to EUR300m. Currently, around 3,000 employees assemble the Volkswagen and Škoda models at the GAZ plant in Nizhny Novgorod.

Supply of Volkswagen 2.0 TDI engines from the plant in Salzgitter, Germany for GAZ production:

There is to be an additional, second step in the cooperation between the parties with a view to developing the model range and growing product sales volumes.

GAZ Group plans to equip GAZ vehicles with Volkswagen TDI 2.0 engines from the Salzgitter plant in Germany. The diesel engines, which fulfil all legal requirements and applicable emissions standards, will be integrated in the new GAZelle NEXT family, which includes drop-side trucks, full-metal vans and minibuses. Volkswagen will provide technical support to integrate the engines in the GAZ model range.

“Expanding cooperation with the Volkswagen Group will ensure further modernisation of Gorky Automobile Plant’s capacities and give a new impetus to the development of our model range and growth of GAZ export sales,” said Russian Machines chairman, Siegfried Wolf.